Malaysian debt watcher upgrades PH ratings

In a report released Wednesday, Malaysia-based RAM Ratings Services Berhad (RAM) announced that it upgraded the Philippines’ global credit rating by one notch to “gBBB2(pi),” or BBB equivalent, a notch above the minimum investment grade.

The upgrade was on the back of the country’s sustained growth momentum, a persistent uptrend in foreign direct investment (FDI) inflows, and continuous progress in the government’s economic reform program.

RAM also raised the Philippines’ regional and Malaysia national ratings to AA3, three notches away from the highest rating of Triple A, citing the country’s “superior capacity to meet its financial obligations.” All new ratings were assigned

a “stable” outlook premised on the country’s “strong external position and economic resilience amid ongoing reforms.”

Under RAM’s definitions, a global rating reflects a country’s perceived creditworthiness compared with countries from around the globe, while a regional rating shows comparison vis-a-vis other Southeast Asian countries. A Malaysia national rating, meanwhile, reflects perceived credit-worthiness before Malaysian investors.

The Malaysian debt watcher also took note of recent legislative reforms deemed vital to further economic growth: tax reforms, the national ID system, the Ease of Doing Business Act, and the shift from obligation to cash basis in the national budgeting system.

It pointed out that “the government’s ambitious infrastructure program is broadly on track,” given that “out of 75 flagship projects, 35 projects had been approved by the authority as of June 2018 compared to 18 a year ago.” It also cited growth in FDIs, the rate of which is among the fastest in the region. Net FDI inflows amounted to $4.8 billion as of May 2018, up by 49.0 percent year- on-year.

RAM also expressed confidence that the moderation of the Philippines’ economic growth to 6.0 percent in the second quarter still kept the economy among the fastest growing among emerging markets in Asia.

On the recent uptick in inflation, RAM noted such to be “manageable and transitory, given various reforms and policy measures aimed at strengthening government operations and more inclusive growth in the long term.” /