Filipino economic managers assured American investors of long-term sustainability of the Philippines’ economic growth.
Finance Secretary Cesar Purisima led a Philippine delegation to woo American investors by showing the long-term sustainability the country’s economic gains despite the uncertainty brought by the national elections.
Filipino officials met US executives from 18 asset management companies in a non-deal roadshow in New York, Boston and Los Angeles on March 4 to 9, with the goal of sharing the Philippines’ positive economic story.
“The Philippines used to suffer from stubborn speculative credit ratings. But under the Aquino administration, the economy finally has secured investment-grade sovereign credit ratings in 2013 from the three major international credit rating agencies—Fitch, Standard & Poor’s and Moody’s—which cited significant improvement in its macroeconomic fundamentals and governance standards,” Bangko Sentral’s Investment Relations Office said.
This was followed by another upgrade in 2014 by S&P and Moody’s to BBB and Baa2, respectively, which are both a notch above the minimum investment grade. These ratings are assigned a “stable” outlook.
IRO said the turnaround in the Philippines credit story had led to lower interest rates on debt papers of the Philippine government, thereby reducing borrowing cost.
The investment grade ratings also influenced a decline in commercial lending rates, allowing businesses and consumers in the country to more easily access financing.
The pending May elections, however, may raise questions on sustainability of the country’s economic achievements.
Purisima led the team in the New York leg, while National Treasurer Roberto Tan took the lead in the Boston and LA legs. Bangko Sentral Deputy Governor Nestor Espenilla Jr. joined the team in New York and Boston.
The United States is one of the key markets for Philippine debt securities. “Restoring confidence in the Philippines is a large part of why we are riding this virtuous cycle today. As we work towards sustaining reforms to continue being Asia’s resilient bright spot, the work endures,” Purisima said.
“In the fiscal sector, including the area of liability management, both legislative and administrative reforms instituted over the years will help see to it that the Philippines stays on the path of a declining debt burden,” Tan said.
“In turn, the continually widening fiscal space will allow the government to invest even more in infrastructure and social services for a sustainable and inclusive growth,” Tan said.
Espenilla said key structural reforms implemented in the areas of monetary policy and bank regulation would help the economy continue to enjoy price and financial-system stability, which are both crucial in helping maintain a robust and stable economic growth for the long term.