BSP confident on Philippine credit rating

• May 21, 2021

MANILA, Philippines — The country’s credit grade remains on solid footing despite the rising costs of pandemic response, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said yesterday.

He said major international debt watchers such as S&P Global Ratings, Moody’s Investors Services and Fitch Ratings are likely to consider the sustainability of the government’s borrowing program as they review the sovereign rating for the Philippines.

Diokno noted that while the share of debt to economic output has risen as a result of unexpected expenses arising from the public health crisis, it remains below the 60 percent internationally accepted threshold.

“Because of the reforms that we have done, our borrowing program is sustainable. So there should be no fear that the rating agencies will downgrade us,” Diokno said in a virtual briefing yesterday. “In fact, in a sea of downgrades, they have affirmed the rating of Philippine international credit.”

The country entered 2020 with a historic low debt-to-GDP ratio of 39.6 percent, but this has risen to a 14-year high of 54.5 percent as unplanned spending was met with a reduction in revenues as lockdowns severely limited business activities.

Diokno said, however, that it is unlikely that the 60 percent threshold will be breached.

He noted that revenue collections have been improving as more sections of the economy regain footing.

“I don’t think we will exceed the 60 percent, and the economic managers are very much aware of this,” he said. “In fact, we continue to perform on the revenue side.”

Diokno also noted that the government will continue to practice prudence in borrowings, with a preference on the domestic debt market.

Source: https://www.philstar.com/business/2021/05/21/2099677/bsp-confident-philippine-credit-rating