The Philippines can expect another credit ratings upgrade sooner than later from global rating agencies amid the country’s robust economic growth and strong external position, backed by the government’s ongoing reforms especially in the area of taxation, an economist said Monday.
ING Bank Manila senior economist Nicholas Mapa said given its strong external position despite the possible global slowdown, the Philippines could look forward to a possible ratings upgrade as economic growth remained relatively robust.
“Given the dynamics akin to the Philippines, with aces in the form of steady overseas Filipino remittances and BPO receipts, the Philippines remains more insulated than regional peers even in light of the possible trade war,” Mapa said in a report.
“If the government can help support the growth momentum and at the same time ensure the infrastructure buildup continues, we can expect ratings agencies to take notice sooner rather than later,” Mapa said.
The Department of Finance earlier said there was a possibility that the Philippines would be granted another ratings upgrade in the near term with the country showing signs of resilience in the face of global headwinds.
The agency mentioned the ongoing tax reforms and the possible changes to bank secrecy law as key to getting the nod.
The Philippines currently enjoys investment grade ratings from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.
Latest data from the Bangko Sentral ng Pilipinas showed that gross international reserves rose to $83.2 billion as of end-March 2019 from $82.78 billion in February.
The end-March 2019 level of GIR serves as an ample external liquidity buffer equivalent to 7.3 months worth of imports of goods and payments of services and primary income. It is also equivalent to five times the country’s short-term external debt based on original maturity and 3.4 times based on residual maturity.
The economy is also seen to continue its robust growth trajectory this year and in 2020. The International Monetary Fund slightly cut its growth forecast for the Philippines this year to 6.5 percent from the 6.6-percent estimate made in October 2018.