After the en masse resignation of key cabinet officials in July last year, credit rating agencies including the usually upbeat JCRA downgraded their outlook rating on the country to "negative".
Credit rating agencies give out their all-important credit rating on sovereign borrowers like the Philippines based on various indicators of default.
As a leading indicator, however, credit rating agencies also give out so-called outlook ratings to give the market a heads-up on whether a borrower was facing either an upgrade or a downgrade in its actual credit rating.
After meeting with JCRA representatives, Japanese investors and officials, Philippine officials expressed optimism that a "two-notch upgrade is not impossible."
According to the Investor Relations Office (IRO) which arranged last week’s roadshow in Tokyo, JCRA had expressed satisfaction over the increase in the value-added tax rate from 10 percent to 12 percent.
IRO executive director Rene Pizarro told reporters that JCRA had scheduled its annual visit to the country in mid-March when the agency would reevaluate its credit ratings on the country.
"They see we have strong economic fundamentals and we have received a very good feedback from them," Pizarro said. "I wouldn’t be surprised if they upgrade us not just to stable but to positive."
JCRA’s outlook downgrade came last year after the political crisis that rocked the Arroyo administration after the resignation of former Finance Secretary Cesar Purisima, Trade Secretary John Santos, budget secretary Emilia Boncodin and seven other key economic officials including the widely-popular revenue commissioner Guillermo Parayno.
"Should the political crisis linger on or the implementation of the VAT law be delayed, structural reforms centering on the fiscal reforms would inevitably be forced to slow down," JCRA said after its outlook downgrade.
Before its outlook downgrade, JCRA had already downgraded the Philippines from BBB with a negative outlook to BBB-minus with a stable outlook.
If JCRA upgrades its outlook from negative to stable, it would put the country on its way to getting an actual credit rating upgrade back to BBB.
Of the four major credit ratings agency, only JCRA classified the Philippines as investment-grade. Fitch, Standard&Poors and Moody’s all consider the country as below-investment grade, about 2-notches above from default grade.