Japan debt-watcher upgrades PHL investment grade rating

The Philippines received another upgrade, this time from Japan Credit Rating Agency Ltd. (JCR), a development further cementing the country's status as a viable investment destination. In a statement Tuesday, the Tokyo-based debt-watcher said it raised the Philippines' rating, which was already at investment grade, to BBB from BBB-, with a stable outlook. JCR said it upgraded the Philippines on rising gross international reserves, a relatively stable political environment, and the economy’s robust growth. This comes on the heels of Standard & Poor's raising the Philippine credit rating last Thursday, following a similar move by Fitch Ratings in March, giving the country its first investment grade rating from a major debt watcher. “JCR is of the view that the Philippine economy will, by and large, sustain an annual economic growth at around 6 percent in the years to come, supported by strong domestic demand,”  the ratings agency said. “Its current account will remain in surplus backed by OFW (overseas Filipino workers) remittances and business process outsourcing (BPO) revenues,” JCR added. Last year, the Philippines posted a 6.6-percent growth in gross domestic product (GDP) largely on a strong services sector and robust remittances from Filipinos working and living overseas. Moreover, JCR noted that the country's fiscal position “will continue to improve moderately as the Aquino government is committed to hold the fiscal deficit/GDP ratio within its 2.0-percent target from 2013 onwards through higher taxes on tobacco and alcohol and enhanced tax collection efficiency.” The Sin Tax Reform Law, which took effect last January, is one of key revenue measures that debt watchers said could hike government collections. JCR, however, said the Philippine government should “further strengthen its tax base not to lose momentum of its fiscal position improving and to make sure a sustained economic growth can be linked to increased tax revenues.” It, likewise, said deepening and diversifying financial markets is “imperative” in supporting capital formation needed to support a higher GDP growth trajectory. Established in 1985, JCR is a Japanese financial services company which publishes credit ratings for Japanese companies, local governments, and other interested parties. — Siegfrid O. Alegado/BM, GMA News