Japan-based debt watcher Rating and Investment Information Inc. (R&I) on Friday affirmed the Philippines’ investment grade rating of ‘BBB’ as the country continues to show sound macroeconomic fundamentals.
R&I also assigned the ‘BBB’ rating with a ‘stable’ outlook, given the likelihood that factors supporting the rating would be more or less firm over the medium term under the leadership of President Rodrigo Duterte.
“The Philippines’ economy remains solid. Risks are limited in terms of external and fiscal positions, and the financial system continues to be stable. Per capita income also keeps improving,” R&I said in a statement.
R&I said the Philippines had ample foreign exchange reserves and improving government debt ratio.
Gross international reserves, at $86.1 billion as of end-September 2016, was enough to cover 10 months worth of imports and services, providing sufficient buffer against external shocks, it said.
The country’s GIR was higher than its external debt, which declined to $77.7 billion as of end-June, equivalent to 26.2 percent of gross domestic product.
General government debt as a percentage of GDP fell to 35.4 percent as of end-June 2016 from 36.3 percent as of end-December 2015.
The government said the rising private consumption and investments would support the Philippines’ official growth targets of 6 percent to 7 percent this year and 6.5 percent to 7.5 percent in 2017. GDP growth averaged 6.9 percent in the first half of 2016, the highest among major Asean economies.
Projects approved by the Board of Investment jumped 49 percent year-on-year to $6.1 billion in the first nine months of 2016.
Investor confidence led to sustained and rapid growth in actual foreign direct investments, which grew 71 percent year-on-year to $5.4 billion in the first eight months.
“The favorable credit perception of the Philippines comes on the back of efforts of the Duterte administration not only to maintain economic gains of the past but to substantially build on those to achieve inclusive growth. By 2022, we aim to have a Philippines that will have become an upper middle-income economy as a result of further reforms that have decisively attacked poverty, attracted more investments, and created enough jobs for all Filipinos,” Finance Secretary Carlos Dominguez III said.
