Philippines gets credit upgrade from Japan debt watcher

Nears closer to much-coveted A rating

MANILA, Philippines — The Philippines secured a credit rating upgrade from Tokyo-based Rating and Investment Information Inc. (R&I) to BBB+ from BBB as the government ramps up efforts to attain the much coveted A credit rating by 2022.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the upgrade keeps the Philippines on course toward the “Road to A” agenda, a government inter-agency initiative led by the BSP’s Investor Relations Office (IRO).

“Given significant improvements in the country’s macroeconomic conditions, which are made possible in part by a favorable inflation environment and a sound financial system, hitting an A-scale rating from R&I and the other debt watchers within the next two years is achievable,” Diokno said.

The BSP chief said there is no room for complacency for monetary and fiscal authorities in the country.

“This is an all-of-government undertaking. On the part of the BSP, we will continue to adhere to the sound conduct of monetary policy and banking supervision. We will also vigorously pursue our additional mandates of supervising the country’s payments and settlements system and spearhead efforts to ensure a stable financial system,” Diokno said.

Diokno said securing an A rating is not an end in itself, emphasizing that the overarching objective is a stronger, stable, and a truly inclusive economy.

Attaining an A rating provides significant benefits such as lower borrowing costs for both the government and private entities.

“For the government, an A rating will translate to lower borrowing cost for the government. For ordinary citizens, this means that the government’s ‘savings’ from reduced borrowing cost may be used to fund more roads, urban transport, mass housing, education and health services, and social welfare. Over time, interest rates on loans may also decline, thus benefiting individuals and firms securing loans for consumption and investments,” Diokno said.

This is the second BBB+ rating – just a step away from the minimum score within the sought-after A scale – for the Philippines after S&P Global Ratings upgraded the country’s credit rating in April last year.

Finance Secretary Carlos Dominguez said the upgrade from R&I was overdue in light of the positive trends under the Duterte administration that strengthened investor confidence in the Philippine economy.

“Declining poverty incidence and a lower unemployment rate, massive investments in infrastructure and human capital development have resulted in consistently high growth and more jobs. A series of socioeconomic reforms in Congress intended to achieve greater economic inclusion have impressed upon the international business community the unwavering commitment of President Duterte to sustain the growth momentum and improve the lives of our people,” Dominguez said.