Japan agency gives Phl positive credit rating

MANILA, Philippines - The Philippines has received a “positive” credit rating outlook from a Japan-based debt watcher.

Rating and Investment (R&I) Information Inc., a rating agency under the Nikkei Group of Companies, revised its outlook on the country’s foreign-currency issuer rating of BBB- yesterday, signaling a possible upgrade in the months ahead.

“The economy of the Republic of the Philippines has started to show strong growth thanks to continued robust consumption driven by remittances from overseas Filipino workers (OFW), coupled with expansions in public investment and exports,” R&I said in a statement.

Finance Secretary Cesar Purisima called the outlook a “timely and balanced” evaluation of Philippines’ creditworthiness.

Another credit rater, Moody’s Investors Service, has just concluded its due diligence for possible upgrade.

“The gains of good governance are again recognized by those who monitor world economies, with our tax collection reforms and our landmark sin tax reform law contributing greatly to the positive outlook,” the finance chief said.

“I commend R&I for noting not just the prudent fiscal management we have implemented under President Aquino, but the great strides we have taken toward lasting peace in Mindanao,” he added.

Moody’s still rates the country one notch below investment grade, at Ba1, which was “on review for possible upgrade” last month.

Fitch Ratings and Standard & Poor’s ratings services have put the Philippines under investment watch.

In June, Japan Credit Rating Agency Ltd. also raised its evaluation of the country’s creditworthiness to BBB from BBB-, under investment grade.

Now, R&I said it is likely to follow that lead “if fundamentals for economic growth are solidified” and once per capita income – a gauge of how much growth has benefited the population – becomes “more promising.”

The Philippine economy became Asia’s fastest growing in the first quarter after it expanded by 7.8 percent, ahead of the government’s six- to seven-percent target for the year.

Last year, the Philippines grew 6.8 percent.

“The Philippines is the only country which has yet to reach per capita GDP of $3,000 among the five founding members of ASEAN (Association of Southeast Asian Nations); at long last, the country sees a clearer opportunity for catching up,” R&I said.

Strong growth has been buttressed by low inflation, which averaged at below-target of 2.9 percent as of the first semester.

Dollars are also coming in, thanks to more than $20 billion in OFW remittances and $10 billion in business process outsourcing earnings each year.

These funds, R&I said, have helped the country build its foreign reserves to $80.728 billion as of the first half, enough to sustain the economy’s progress even if a financial downturn hit the country for a year.