MANILA, Philippines — A Japan-based debt watcher maintained its credit rating for the Philippines on the back of “high-level economic growth.”

In a press statement dated April 26, the Japan Credit Rating Agency Ltd. said it affirmed its “BBB+” rating—which signifies adequate level of certainty to honor financial obligations—with a “stable” outlook for the Philippines’ foreign currency and local currency long-term issuer ratings.

“The ratings mainly reflect the country’s high level of economic growth underpinned by solid domestic demand, resilience to external shocks supported by a declining external debt and accumulation of foreign exchange reserves, and the government’s comparatively sound fiscal position,” JCR said.

“On the other hand, the ratings are constrained by the country’s challenging investment environment, in particular its infrastructure which needs further enhancement despite some improvement that has resulted from the measures taken by the government in recent years,” it added.

JCR’s rating opinions guide mostly Japanese companies in their investment decisions.

A higher rating can lower the cost of borrowing in foreign currencies and can help make the country more attractive to foreign investment.

The Duterte administration plans to spend more than P8 trillion until 2022 to upgrade the nation’s dilapidated infrastructure and aging ports to spur gross domestic product expansion to 7-8 percent.

Last year, President Rodrigo Duterte signed into law the Tax Reform for Acceleration and Inclusion Act, which increases take-home pay for most wage earners while projected revenues to be foregone will be offset by higher excise levies on fuel and cigarettes, among others.

The TRAIN law—the first package of the Comprehensive Tax Reform Program—aims to provide additional revenues needed for the government’s ambitious infrastructure program.

“JCR will closely monitor future progress on CTRP and execution of the infrastructure spending,” the rating agency said, adding that the Philippine economy is expected to remain resilient to external shocks and retain its solid growth led by domestic demand.

The JCR also said the impact on investment climate of insurgency in the restive region of Mindanao “has so far been rather limited.”

Reacting to the JCR’s decision, Bangko Sentral ng Pilipinas Governor Nestor Espenilla said “favorable credit rating actions are a welcome pat on the back.”

“The BSP is committed to its price and financial stability mandates, which have provided an environment conducive for economic growth and stability over the years,” Espenilla said.

“At the same time, the BSP is keen on helping push the economy toward the next stage of development through financial sector reforms, which are vital for accelerating growth and making it more inclusive,” he added

Source: https://www.philstar.com/business/2018/04/27/1810005/japanese-credit-rater-keeps-investment-grade-philippines#XksRh7XUh5vwZCz8.99