PH could face credit

“These projections rest on the assumption that GDP growth prints 5.8 percent to 6.5 percent - tor stabilizes at 1.5 percent, the PHP/ USD weakens to 52, and the effective nominal interest rate advances 200bps [basis points] to 7.5 percent between now and 2021,” it said.

Under the Deutsche Bank base at 3 percent-of-GDP, the debt ratio would broadly stay at 45 percent of GDP in 2017 through the next

This German bank’s estimate compares with the 35.5 percent general government debt to GDP as of end-September 2016.

“We are less worried about the government’s ability to pay, given in the Bond Sinking Fund and a low debt ratio to begin with,” it said, noting that under the 4 per instance, interest payments would only increase from 14 percent of revenues currently to 19 percent by 2021, still a far cry from the 37 percent peak in 2005 during the

However, it warned that rising debt ratios does send the signal that the near- term economic gains from the government’s spending push would come with long-term pains as interest payments increasingly eat into the annual budgets.

It also added that a weakening the stress from the erosion of the current account surplus, which may have already reverted to a

The BSP has yet to release the full- year 2016 current accounts data, but based on its third-quarter report, the main component of the balance of payments remained in surplus at $979 million, equivalent to 1.3 percent of GDP.

Deutsche Bank’s view on the country’s credit ratings is consistent with a recent commentary by Moody’s, which said that credit outcomes in 2017 would be determined by the effectiveness of ongoing reform efforts and the evolution of political risks in the Philippines.

It also shared S&P’s statement that the Philippines should not expect credit upgrade in the next two years and that it may even cut the ratings if the government reform agenda stalls.