Finance Secretary Carlos Dominguez III assured investors there will be no downgrade in the investment grade rating amid concerns of alleged extra-judicial killings in the Philippines.
Dominguez noted that credit rating agencies has expressed concerns over the spate of extra judicial killings.
A downgrade in the investment rating will trigger an increase in interest rates on existing and new loans.
“When the interest rates go up, for the government that means to say we have less budget to spend on our program. If the interest rate goes up domestically, of course the companies will be hard hit… But definitely… people who buy cars or motorcycles… on credit are going to pay a higher rate,” Dominguez said.
He said lower foreign direct investments would also mean less jobs. But Dominguez said global interest rates were relatively low and the local inflation rate was benign.
“We have a lot of excess liquidity domestically so we have no problems. And I said we haven’t changed anything so how can you say that our rating is going to go down? It’s crazy,” Dominguez said.
Global debt watcher Standard and Poor’s affirmed the Philippines investment grade rating of “BBB” on the back of the country’s strong external position.
S&P, however, warned the Duterte regime’s bloody war on drug crimes was threatening the economy and the country’s investment rating.
The credit rating agency said a higher rating was unlikely over the two-year horizon, but it might raise the the level if continued fiscal improvements under the new administration would boost investment and economic growth prospects.
