The Duterte administration is performing well on the economic front. The move of S&P Global Ratings to upgrade the Philippines's debt rating to “BBB+” from “BBB” on Tuesday is a vote of confidence from the international ratings agency on the way the Philippine economy is being run.
The rating upgrade to “BBB+” puts the Philippines credit standing just a notch away from “A minus,” or within the coveted “A” scale. A rating within the “A” scale will place the Philippines on the radar screen of even more investors.
S&P cited the country’s above-average economic growth, a healthy external position and sustainable public finances in raising the long-term sovereign credit rating of the Philippines a notch higher. The upgrade put the Philippines at par with Mexico, Peru, Thailand and Trinidad and Tobago. It is higher than the “BBB” ratings of Italy, Portugal, Hungary, Panama and Uruguay.
S&P said the stable outlook reflected its assumption that the Philippine economy would continue to achieve an above-average real gross domestic product growth over the medium term, supporting the sovereign's credit profile.
The rating upgrade is expected to translate into lower interest on the foreign borrowings of the Philippines, as foreign banks and lenders view the Philippines as a country with lesser debt risk. This, in turn, means lower operating cost in factories and service-oriented companies, and serves as a magnet for foreign investors.
One analyst says the credit upgrade will strengthen peso against US dollar in the near term on the assumption that more foreign investors are likely to place their bet on the Philippines.
The country's economic managers have run a tight ship amid increasing revenues and a manageable budget deficit. They have pursued President Rodrigo Duterte's call to build vital infrastructure projects to sustain economic expansion over the medium- and long-term period.
The Philippines can expect more credit upgrades once it completes all the tollroads, bridges, airports, rail and other infrastructure projects designed to speed up the flow of goods and services. The Philippines by then would have created millions of jobs and joined the ranks of more prosperous nations in Asia.