MANILA, June 16 (Mabuhay) — Malacañang on Monday welcomed Japan Credit Rating Agency Ltd.’s (JCR) decision to upgrade its rating on the Philippines from BBB+ to A- with “stable” outlook amid fears of global economic downturn due to the coronavirus disease 2019 (Covid-19) pandemic.
“This recognition by Japan’s leading credit agency is an affirmation of the international community’s faith in our economic strength and resilience amid the worst global downturn in nearly a century,” Presidential Spokesperson Harry Roque said in a virtual presser.
From an expected contraction this year, JCR forecasts growth to recover and rise to between 6 to 7 percent in the medium-term.
The new credit rating, Roque said, would boost the country’s ability to get loans with low interest rate to finance the government’s response against the impact of coronavirus.
“Dahil nga mabuti po ang ating credit rating, ibig sabihin mas mababa po ang interest na mauutang natin at yun uutangin natin ay magagamit natin hindi lang para sa ayuda kung hindi para sa ating response sa Covid-19 (Because we have good credit rating, it means the loans that we will get have low interest and the money we will borrow will be used not only for assistance but for our response against Covid-19),” Roque said.
Roque attributed the JCR’s recognition to the Philippines’ credit standing to President Rodrigo Duterte’s economic team headed by Finance Secretary Carlos ‘Sonny’ Dominguez III.
“We thank our economic team, lalo na (specially) Secretary Dominguez for their initiatives, including reforms that help weather the pandemic and steer the economy towards the new normal,” Roque said.
Dominguez said this achievement was a result of a team effort.
“It’s the result of the President’s strong leadership and the teamwork of the Cabinet, BSP (Bangko Sentral ng Pilipinas), and the legislators,” he said.
In a statement, the BSP said the Japan-based debt rater noted the improved economic fundamentals of the Philippines that makes it more resilient to the pandemic, as well as the government’s bid to implement reforms in the tax system such as through the push for the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
“JCR holds that a downturn will be limited given the country’s strengthened economic base, resilient external position, and the government’s economic stimulus package totaling more than 9 percent of GDP (gross domestic product). JCR also considers that the fiscal soundness will not be impaired because while the fiscal deficit may widen, the package at this time is justifiable and the government debt will remain comparatively subdued,” the BSP said, quoting the JCRA statement.
The credit rater also cited as a plus to the country’s rating the strength of the domestic banking system, which recorded a capital adequacy ratio (CAR), a gauge of financial health, of 15 percent.
The country’s external debt balance, which currently stands at 22.2 percent of domestic output and the strong gross international reserves (GIR), which posted a record-high of USD90.94 billion as of end-April 2020, were also recognized.
“JCR holds that the country will show its high resilience even when global risk-off moves would be triggered again by a second wave of Covid-19 pandemic,” the debt rater said. (MNS)