BSP chief: Credit rating downgrades unlikely
THE head of the Bangko Sentral ng Pilipinas (BSP) is optimistic that the country’s investmentgrade credit ratings would be maintained despite the economy falling into a recession.
In a Viber message on Friday, BSP Governor Benjamin Diokno told reporters that a downgrade of these ratings was “highly unlikely.”
According to him, Fitch Ratings, Moody’s Investors Service and S& P Global Ratings have downgraded 82 sovereigns and revised to negative the outlooks of 104 others in the first half of 2020.
“The Philippines is not one them,” Diokno said, noting that these agencies have affirmed the ratings and outlook they gave to the country.
The Philippines currently has investment-grade ratings of “BBB” from Fitch, “Baa2” from Moody’s and “BBB+” from S&P, all with stable outlooks.
The central bank’s chief remarks come a day after the Philippine Statistics Authority announced that the Philippines had sunk into a recession for the first time in 29 years after gross domestic product (GDP) shrank by a record 16.5 percent in the second quarter, bringing the firsthalf contraction to 9 percent.
Despite this, Diokno said the contraction “does not pose a danger to the Philippines’ strong macroeconomic fundamentals: relatively low debt- to- GDP ratio, one of the highest tax effort in the region, benign inflation and well- managed inflation expectations, strong peso, hefty gross international reserves, wellcapitalized banking system with low nonperforming loans.”
He also said economic managers saw the plunge as temporary, as it resulted from the severe lockdown measures imposed in the quarter to contain the spread of the coronavirus in the country.
But recovery is on its way, he added, and they expect a strong rebound of 6.5 to 7.5 percent in 2021.
The BSP chief urged policymakers “to look beyond the current crisis” by crafting strong economic recovery program accompanied by more structural reforms that would allow the Philippines to rebuild better for the future.
A big part of the success in overcoming the crisis, he said earlier, may be attributed to leadership, clear messaging and human behavior.
“Each individual has a role to play in winning the war against the virus. The virus won’t go away soon, so we have to learn to live with it,” Diokno said then.