Friday, June 24, 2011


After the Philippines won two credit rating upgrades in just over a week, the Department of Finance (DoF) is confident that the Aquino administration can work to attain investment class by 2013.

Finance Secretary Cesar V. Purisima said in an interview with reporters that the country is nearing to its goal to achieve investment grade credit rating after two of the three international rating agencies raised the country’s grade.

Fitch Ratings raised on Thursday the country’s long-term foreign currency bond rating to BB+ from BB, or one step below investment grade, due to government’s efforts to reduce its budget deficit.

Moody’s Investors Service, meanwhile, upgraded the country's foreign and local currency long-term bond ratings to Ba2 from Ba3, the highest level since the start of 2005, on President Aquino's efforts to target tax evaders and convince investors the government can narrow a record budget shortfall.

Purisima earlier reported a budget surplus of P26.3 billion in April as revenue rose and spending fell. The surplus was P61 million in the first four months, compared with a deficit of P131.80 billion in the same period in 2010.

Higher debt ratings reduce the cost of borrowing, making it cheaper for the Philippines to sell debt to fund spending on roads, bridges and schools.

Purisima said Fitch upgrade is the fourth positive ratings action in the 11 months of the Aquino administration and is unprecedented in Philippine history.

He added that the upgrade is another affirmation of President Aquino’s agenda and leadership, a concrete and objective vote of confidence that the Philippines is headed in the right direction.

“The Aquino administration will continue to push for more reforms that promote fiscal sustainability and translate this to inclusive growth toward the fulfillment of President Aquino's Social Contract to the Filipino people,” Purisima said.

Commenting on the one notch upgrade, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. said the Philippines’ strengthening credit profile continues to be internationally recognized by both markets and the rating agencies.

“The upgrade from Fitch Ratings brings the Philippines one notch closer to investment grade status and is a clear acknowledgement of the country’s improving macroeconomic fundamentals,” Tetangco said.

He added central bank will continue to adopt appropriate monetary policy that will keep prices stable while remaining supportive of the country’s growth targets.

“The BSP will also remain resolute in effectively managing the country’s external position, which has been providing the economy a healthy buffer against external shocks, to ensure continuing macroeconomic stability,” Tetangco said.

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