Japan's R & I affirms PHL's BBB- rating with stable outlook

Japan’s R & I has affirmed its credit rating of BBB- for the Philippines with a stable outlook, citing a strong economy driven by domestic demand.

 

A BBB- rating means the issuer’s creditworthiness is sufficient though some factors require attention in times of major environmental changes, R & I noted.

 

Philippine fiscal health has improved with the deficit kept low, and its current account surplus keeps the country resilient against external shocks, it said.

 

What has room for improvement is per capital GDP. “Per capital GDP is at approximately $2,400, which is a major constraining factor for the rating, according to R & I.

 

“Although the country is required to maintain a strong growth under the pressure of population increase, expansion of investment takes a long time,” it added.

 

Widening the tax base and improving the capital markets are other areas of the Philippine economy that needs attention.

 

R & I would continuously “keep an eye on whether the Philippine government will be able to expand its revenue base and develop more sophisticated investment environment including upgrading the infrastructure to solve the investment shortage issue.”

   

While advanced countries have suffered an economic slowdown, the Philippine economy has been underpinned by strong domestic demand, according to the Japanese rating agency.

 

“To promote investments, the Philippine government needs to play a leading role in improving the investment environment by expanding public investments. The government intends to use the scheme of public-private partnership to accelerate investment in infrastructure while controlling spending. R&I will pay attention to those efforts by the government,” it said.

 

The Philippine economy grew by 6.4 percent in the first quarter from 4.9 percent a year earlier, surpassing expectations. —VS, GMA News