Moody’s Investors Service upgraded Philippine credit rating by one notch to Baa2, with outlook seen as stable, from Baa3.
There are three key drivers listed by Moody’s for the said latest rating upgrade. First, ongoing debt reduction as aided by improvements in fiscal management. Second, continued favorable prospects for strong economic growth. Third is due to limited vulnerability to the common risks currently affecting emerging markets.
“The first driver of the upgrade is the decline in the Philippines’ debt burden, which has coincided with structural improvements in fiscal management. Administrative reforms in the key revenue-collecting agencies – most recently in the Bureau of Customs – have led to revenue growth in excess of nominal GDP growth for a fourth consecutive year,” Moody’s Investors Service explained.
“The Philippines is also less reliant on a slowing China, while its solid current account surplus provides a degree of resilience to shifts in global liquidity conditions in the context of the imminent normalization of US monetary policy,” it added.