By NG Seruela
International debt watcher Fitch Ratings affirmed on Monday (July 12) the Philippines’ “BBB” credit rating, which is one notch above the minimum investment grade, amid the COVID-19 pandemic.
In a statement by Fitch Ratings, it said the rating “affirmation reflects the Philippines’ robust external buffers and projected government debt levels that, while rising, should remain just below ‘BBB’ peer medians.”
“These are balanced against low per capita income levels and indicators of governance and human development compared to peers,” it said.
The company announced that the outlook on the rating was adjusted from “stable” to “negative.” It added that the outlook adjustment reflects the “downside risks to the Philippines’ medium-term growth prospects and possible challenges associated with unwinding the exceptional policy response to the health crisis and restoring sound public finances as the pandemic recedes.”
The Philippines has maintained the same rating since December 2017.
In relation to this, Finance Sec. Carlos Dominguez said the negative impact of the pandemic on the country will only be “temporary.”
He said the PH economy is “already en route to a solid recovery path and is seen to have posted double-digit growth in the second quarter of this year amid the fast-track implementation of the vaccine rollout and economic recovery measures.”
“We expect economic growth to range between 6 and 7% this year and an even higher 7 to 9% next year,” he added.
Dominguez said the upbeat growth projections take into account the “continued relaxation of mobility restrictions, higher spending on COVID response and economic recovery programs, and the faster rollout of the mass vaccination program.”
“We target to achieve ‘population protection’ by having 70 million Filipinos, or 100% of our adult population, inoculated by the end of this year,” Dominguez added.
He also said the national government debt, as a percentage of gross domestic product (GDP), is projected to “settle at a still manageable level of 58.7% this year.”
“We expect to head back to the road of fiscal consolidation once the virus is contained and public spending normalizes to pre-COVID levels.” – jlo
