Joint statement: BSP-IRO on Standard & Poor’s credit rating upgrade (Official Gazette)

The Philippines today received a credit ratings upgrade from international credit rating agency Standard & Poor’s (S&P). In a statement released by the agency, the country’s long-term sovereign credit rating was upgraded to “BBB” with a stable outlook from  “BBB-.” This upgrade follows the agency’s rating action in May 2013, when it assigned the Philippines an investment-grade rating. The country has also been granted investment-grade ratings in 2013 by the other two major ratings agencies, Fitch and Moody’s, with the latter assigning a positive outlook, signaling that another upgrade could follow.

Receiving news of the announcement, Finance Secretary Cesar Purisima thanked the credit rating agency for the upgrade. “We are very pleased that S&P has recognized the Philippines’ remarkable economic comeback,” Purisima said, adding “This is further proof of President Aquino’s belief that good governance is good economics. We will continue to institutionalize good governance so our country’s economic growth is both sustainable and inclusive. This has been the 18th positive credit rating action since President Aquino took office, and the 4th upgrade from S&P.”

In raising the ratings, S&P said “We expect ongoing reforms on a broad range of structural, administrative, institutional, and governance issues to endure beyond the term of the current administration.”

S&P expressed optimism that the gains in revenue generation, spending efficiency and improvements in public debt profile and the investment environment will be sustained under the next administration.  S&P also cited the country’s strong external liquidity and international investment position coupled with an effective monetary policy framework that has sustained low inflation and interest rate as supportive to the rating upgrade.

Governor Amando M. Tetangco, Jr. of the Bangko Sentral ng Pilipinas (BSP) joined Secretary Purisima in thanking S&P.  The Governor said that “The BSP welcomes the decision of S&P to upgrade the Philippines’ long-term sovereign credit rating by one notch, from “BBB-“to “BBB.”  This is a major feat as S&P did a straight upgrade.  They no longer assigned a positive outlook before upgrading the rating.”

The Governor stressed that “This action is further affirmation of the country’s strong macroeconomic fundamentals. Since S&P raised the Philippines’ credit rating to investment grade in May 2013, the Philippines proved that it is able to sustain high economic growth despite external volatility and in the case of last year – successive domestic natural disasters.  Gross domestic product grew 7.2% in 2013, one of the highest growth rates seen in Asia, while inflation was kept at 3%, the lower end of the inflation target range of 3%-5%.  This rating upgrade is also a recognition that the structural reforms that we have put in place continue to gain traction, as demonstrated by the significant improvements in the country’s position in international governance and competitiveness surveys.”

Governor Tetangco emphasized that, “The BSP will continue to support sustained and inclusive economic growth amid a low-inflation environment.  We stand ready to adjust our monetary policy stance and adopt macroprudential measures, as appropriate, to guard against risks that would unsettle inflation expectations and threaten the soundness of our financial system. We will also continue to craft external sector policies that will help keep our external liquidity position strong.”


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