Japan agency affirms Phl credit rating

Japan-based R & I credit rating agency has affirmed its credit BBB- rating and stable outlook on the Philippines, citing the country’s strong domestic demand-driven economy.


According to the credit rating agency, a BBB- rating means that the issuer’s creditworthiness is sufficient though some factors require attention in times of major environmental changes.


R & I said the government’s fiscal health has improved with the deficit kept low. It also cited the continued current account surplus, which keeps the country resilient against external shocks.


“With a continued current account surplus, the country keeps strong resiliency against external turbulences,” R & I said.


However, the debt watcher said per capita gross domestic product (GDP) still has room for improvement.


“Per capital GDP is at approximately $2,400, which is a major constraining factor for the rating. Although the country is required to maintain a strong growth under the pressure of population increase, expansion of investment takes a long time,” it said.


R & I said there is still a lot of room for improvement such as improving the domestic capital market and widening the tax base.


It said it would continuously “keep an eye on whether the Philippine government will be able to expand its revenue base and develop more sophisticated investment environment including upgrading the infrastructure to solve the investment shortage issue.”


While advanced countries have suffered an economic slowdown, the Philippine economy has been solid underpinned by strong domestic demand.


“To promote investments, the Philippine government needs to play a leading role in improving the investment environment by expanding public investments. The government intends to use the scheme of public-private partnership to accelerate investment in infrastructure while controlling spending. R&I will pay attention to those efforts by the government,” it said.


In the first quarter of the year, the Philippine economy grew by 6.4 percent, surpassing expectations and beating the 4.9 percent recorded in the same period last year.-The Philippine Star (June 15, 2012)