The ‘Road to A’ starts

In the spirit of Christmas, we do not wish matters that could only evoke unpleasantness that could mar this season of giving and forgiving. And because of the Christmas holiday, it was enough gift for me to travel without any traffic hassle on the road.

I could not believe myself arriving at The Philippine STAR editorial office in Port Area, Manila after less than a 40-minute drive from Paranaque City. The new normal is a one-and-a-half to two-hour drive for the same distance and route everyday. We must be thankful with such simple blessing in our harried everyday traffic on the roads of Metro Manila.

With this in mind, I would like to share another positive news that came out in The STAR Business page last Monday. It quoted Department of Finance (DOF) Secretary Carlos Dominguez about building up the “Road to A,” or the country’s bid to attain the much desired “A” credit standing from international rating agencies. Dominguez disclosed the government is ramping up various tax, financial and economic reform measures as part of the “Road to A” program aimed at obtaining the “A” credit rating from S&P Global Ratings.

This is because the country’s ability to raise enough revenue and minimize borrowings is critical in obtaining the much coveted “A” credit rating, Dominguez pointed out. The Finance chief strongly believes attaining this “A” credit rating is doable for the Philippines. 

Dominguez, it would seem, is not daydreaming. It is not a mission impossible to achieve.

Only last April, the Philippines scored the highest credit rating in history after S&P upgraded the country to BBB+ or a notch lower from the much coveted “A” category on the back of consistent economic growth and prudent spending.

From the website of S&P, the best credit grade is “AAA.” This rating means it is highly likely that the borrower will repay its debt. The worst is “D,” which means the issuer has already defaulted. They use multiple letters (sometimes accompanied by pluses or minuses) to indicate strength. In total, there are 17 ratings, even though S&P only uses four different letters. This is achieved by doubling or tripling letters – the more the better. Ratings can also include a plus sign, which is better than stand alone letters, or a minus sign, which is worse than stand alone letters.

For the first time in recent history of the country’s credit rating status, attaining “A” will hopefully become a reality before the end of term of President Rodrigo Duterte. Dominguez, a classmate of President Duterte during their Ateneo High School days in Davao City, is very thankful to the present leadership of the country who does every effort to temper politics from getting in the way of economic policies of the government.    

Of course, many decisions of the President always involve politics, and economic policies of the government are not immune to that. But we see a semblance of reason whenever the President tosses to his Cabinet economic team the handling of ticklish issues that are not within his expertise.

From day one of his administration, the former Davao City Mayor declared he would not interfere with the work of his Cabinet economic team headed by Dominguez, because, for one, the President would often joke about being a flunkie in school subjects mathematics and economics. But if they need his legal expertise and being a politician for almost three decades, the Chief Executive assuaged Dominguez et.al. he would always be willing to guide them cross the sea of adversities along the way. 

In his year-end interview last week with DOF media, Dominguez told them he expects another credit rating upgrade from S&P in two years as the government continues to pursue financial reforms and maintain fiscal discipline while implementing a massive infrastructure program. He cited the government continues to push the Comprehensive Tax Reform Program (CTRP) to raise the country’s tax effort and bring down the ratio of debt to gross domestic product (GDP).

“Also to make sure that our GDP is growing faster than our loans so that we don’t reach 42 percent debt-to-GDP ratio,” the DOF chief explained. “That’s exactly why we’re working hard, so that it mitigates the jump in borrowing cost,” he added.

To assist DOF in this endeavor, Dominguez counts on the support of the Bureau of the Treasury, Bangko Sentral ng Pilipinas (BSP), as well as the National Economic and Development Authority (NEDA) that will continue to pursue the roadmap to “A” rating especially now that the Philippines will soon be upgraded as an upper middle income or UMI country.

Dominguez is losing though one of his young millennial wards at the DOF who is going up to the BSP. Antonio Joselito Lambino II who has been assistant secretary of the Strategy, Economics, and Results Group (SERG) of the DOF since May 2018 is moving up. Lambino has been named to head the BSP corporate communications that would steer the country’s “Road to A” program.

Lambino holds graduate degrees in Political Communication from the Annenberg School at the University of Pennsylvania and Public Policy from Harvard University’s John F. Kennedy School of Government, which he attended as a Fulbright Scholar and Osmeña Fellow. He received an A.B. in Communication, cum laude, from Ateneo de Manila as an Aquino Scholar, and was named one of the Ten Outstanding Students of the Philippines (TOSP) in 1999.

Lambino’s upcoming new job is not something new to him. He once worked at the World Bank in Washington, D.C. where he was governance specialist, helping reformers in Asia, Africa, and Europe enhance their effectiveness as change agents and anchored research efforts on the communication dimensions of anti-corruption, accountability, and citizen participation.

Lambino will have his hands full in projecting the Philippines deserves an upgrade of its creditworthiness and as an investment destination. But with him at the helm of the BSP communication team, the country’s campaign to build up steam for the “Road to A” starts to get a lift-off.