MikeLigalig.com

The Philippine government’s fiscal consolidation program is expected to get further lift from the upgrade by Standard and Poor’s (S&P) of the country’s credit rating to a notch away from investment grade.

Budget and Management Secretary Florencio Abad, in a statement Thursday, noted that, aside from strengthening the government’s “chances to meet or even surpass our fiscal consolidation targets”, the ratings upgrade “will also enable us to reduce the interest cost of our debt and swap our foreign currency-denominated credit into less volatile Peso instruments.”

“All of these will help reduce the debt burden on our budget and, consequently, create more fiscal space for social and economic services,” he said.

S&P on Wednesday raised its ratings upgrade on the Philippines to ‘BB+’ with Stable outlook from ‘BB’ with stable outlook after noting the continued improvement in the country’s fiscal flexibility.

At the same time, the ratings agency also affirmed the domestic economy’s ‘BB+’ long-term local currency rating, the 'B' short-term sovereign credit ratings and 'axBBB+'/axA-2' ASEAN scale ratings. It, however, changed to 'BBB-' from 'BB+' the country’s transfer and convertibility assessment (T&C).

“In our assessment, the Philippines's fiscal flexibility is gradually increasing, reflecting an improving government debt profile and moderating interest burden,” the ratings agency said in a statement.

S&P noted that “the stable outlook balances the country's emerging net-external-creditor status, relatively strong external liquidity, and signs of improving growth prospects, against low income levels and continuing challenges in fiscal and structural reforms.”

“We expect the country will move into a slight net-external-creditor position this year,” it added.

Linkback: https://tubagbohol.mikeligalig.com/index.php?topic=52196.0