MikeLigalig.com

by pna

The central bank vowed to continue reforms in the financial system to achieve an investment grade rating for the Philippines after Moody’s upgraded the country’s credit rating to a notch below investment grade Monday.

“In our case we will basically just continue to maintain macro stability and continue our reforms in the financial system to make sure it remains sound and stable. And hopefully at some point, with the concerted efforts of all government agencies concerned, as well as the private sector we would achieve investment grade rating at some point,” BSP Governor Amando Tetangco Jr. told reporters.

The central bank chief said an investment grade rating for the country is “possible” in the short term.

Moody’s Investor’s Service revised upwards to “Ba1” from “Ba2” with ‘stable’ outlook the country’s credit rating on account of continued improvement in economic and fiscal performance amid negative global economic developments, better medium term economic prospects, and stable financial system.

The upgrade brought the country’s credit grade level among the three major debt watchers, including Fitch Ratings and Standard & Poor’s (S&P), at the same level.

Tetangco said the structural reforms undertaken with the private sector enabled the country to have a strong banking system “and have transformed our banks into effective financial intermediaries.”

He said the total of 100 basis points in the central bank’s policy rates this year will “help the economy withstand ongoing global economic strains and to support economic growth.”

To date, the BSP’s overnight borrowing or reverse repurchase (RRP) rate is at record-low of 3.5 percent and the overnight lending or repurchase (RP) rate is at 5.5 percent.

These were slashed with 25 basis points each in January, March, July and October.

Tetangco said monetary official’s “prudent approach to external financial management has yielded a more manageable and sustainable external debt position.”

“In fact, the Philippines is one of the few sovereigns among its rating peers to be a net external creditor, with official FX reserves exceeding the country’s gross external debt,” he said.

“The BSP will continue to craft monetary, external and banking policies with the view to ensuring that the gains reaped thus far will lead to the sustained improvement in the country’s real GDP growth, financial sector responsiveness and external debt manageability in a non-inflationary environment,” he added.

Relatively, Finance Secretary Cesar Purisima said the upgrade in the country’s credit rating is a recognition of the “significant progress that the Aquino administration has undertaken to improve the country's economic fundamentals.”

“This 9th positive ratings action is another affirmation of the President's agenda and our underlying belief that good governance is good economics,” he said, noting that “it has been a decade since all three major ratings agencies rated us a notch below investment grade.”

”As the President said over the weekend, this is indeed a great time to be a Filipino. With the President's commitment to maintain macroeconomic stability, enhance fiscal sustainability, and accelerate investment growth, investment grade will definitely come sooner rather than later,” he added.

Moody’s, in a statement, said that the Philippines has demonstrated considerable economic strength and fiscal resilience despite the headwinds from softening external demand.

The country, in contrast to similarly rated countries, is poised to record a combination of faster growth, lower inflation, exchange rate appreciation and an increase in foreign exchange reserves, while maintaining trend debt consolidation, it said.

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