Standard & Poor’s Ratings Services raised its outlook for the Philippines’ credit rating on December 15th to positive from stable. The announcement raises the possibility that the Philippines could soon see its credit rating reach investment grade.
S&P cited “strong external liquidity and signs of improving growth prospects.” The Philippines is currently rated two levels below investment grade, the same as Costa Rica and lower than Indonesia, Malaysia and Thailand.
Philippine President Benigno Aquino has won credit-rating upgrades from Fitch and Moody’s Investors Service this year after intensifying efforts to narrow the country’s budget gap from a record 314 billion pesos (US$7.2 billion) in 2010.
“The Philippines’ external vulnerability has diminished,” S&P said. “We expect further rating improvements to be most likely driven by improvements in fiscal and debt credit metrics.”
The big question now is growth. While the Philippine government has made significant progress on its deficit and fiscal stability, the country’s $200 billion economy expanded by only 3.2 percent in the third quarter and is projected to finish the year well below the Aquino Administration’s growth target. Slower growth is the result of both a global economic slowdown and slower than expected roll-outs of major domestic infrastructure projects.
Find more like this: Philippine Economy, Public-Private Partnership
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