Philippine credit ratings likely to get upgrade – Fitch

MANILA, Philippines – The Philippines could receive another upgrade from Fitch Ratings if the reforms undertaken under the leadership of President Aquino would be sustained in the next administration.

Fitch said the sovereign credit rating of the Philippines could be upgraded after its outlook was raised to positive from stable last September due to the steady strengthening in the country’s structural fundamentals, improvements captured in international measures of governance standards and international competitiveness and reflected in the Philippines’ strong macroeconomic performance.

Fitch said the strong growth, a structural current account surplus and ongoing fiscal policy discipline are driving a steady improvement in the sovereign’s balance sheet of the Philippines.

“Increased confidence that these trends will be sustained under the next administration after the 2016 presidential elections would support the case for an upgrade,” Fitch said.

Last September, Fitch raised the country’s outlook to positive from stable as it affirmed the credit rating at ‘BBB-“ or minimum investment grade on the back of the country’s strong macroeconomic fundamentals as well as the improved government standards and competitiveness indicators under the Aquino administration.

“The outlook on Philippines’ ‘BBB?’ rating was revised to positive from stable in September on a steady strengthening in the sovereign balance sheet and in governance indicators,” the rating agency said.

Fitch pointed out the country’s global competitiveness in the World Economic Forum (WEF) has risen to a level comparable to ‘BBB’-rated peers.

Fitch likewise cited that indicators for corruption, transparency and economic freedom have also improved substantially.

With the upgrade, Fitch could raise the country’s sovereign credit rating over the next 18 months especially if the improvement in governance standards over the Aquino administration would be sustained following a change in government.

Likewise, the country’s credit rating would be upgraded if the strong gross domestic product (GDP) growth without the emergence of imbalances would be sustained and if the general government revenue base that lends greater stability to the government finances would be broadened.

Fitch upgraded the country’s credit rating to ‘BBB-‘ equivalent to minimum investment grade in March last year.

The debt watcher sees the country’s GDP growing 5.6 percent this year as domestic demand remains robust even as external demand weakens.