Palace welcomes Moody's upgrade of RP credit outlook

MANILA, Philippines - Malacañang welcomed yesterday the stable rating given by Moody’s Investors Service on the Philippines’ credit outlook as a sign that market and investor confidence on the economy is strong.

Presidential spokesman Ricardo Saludo said that sound economic management by the administration and the widespread hope for the successful conduct of automated elections this May have boosted consumer and business confidence as reflected in the report of Moody’s.

“Moody’s stable outlook is just the latest among positive international reports on the economy,” Saludo said.

The international credit rating agency gave the Philippines a stable outlook on its Ba3 sovereign credit rating, saying that the prospects for the economy remain good.

Deputy presidential spokesman Gary Olivar noted that Moody’s came out with a very fair rating on the Philippines and that similar ratings could be expected from the two other major credit rating agencies.

“Moody’s typically sets the pace more often than not and I wouldn’t be surprised if we have similar decisions coming out from S&P (Standard and Poors) and Fitch (Ratings),” Olivar said.

“This is particularly gratifying because it comes from Moody’s at this time and I hope it sets the tone (for the other rating agencies),” he added.

Olivar said that more investments, particularly portfolio investments are expected to come in after the positive rating given to the Philippines as the institutional investors rely a lot on the credit ratings in making their decisions on where to put their money.

“An upgrade to stable will obviously open the door for more of these portfolio investments,” Olivar said.

In its report, Moody’s noted that the Philippines was just one of the few countries in Southeast Asia that managed to avoid year-on-year contractions during the global economic recession.

It was noted that the high level of international reserves helped in shielding the Philippines from external shocks.

Consistently strong overseas Filipino workers’ remittances have historically contributed to the strength of the economy and the high level of international reserves of the country.

However, Moody’s pointed out that the government needs to focus on fixing the country’s fragile fiscal position.