MANILA, Philippines - The Bangko Sentral ng Pilipinas said yesterday it is hopeful the country will get another credit rating upgrade from other global debt watchers as the economy continues to demonstrate the sustainability of its growth.
“The BSP remains positive that the other credit rating agencies will recognize, just as S&P (Standard & Poor’s) has, the continued sound macroeconomic fundamentals of the country, particularly the sustained economic growth amidst low and stable inflation, (and) our robust external position,” BSP Governor Amando M. Tetangco Jr. said in an e-mail to reporters.
Moreover, the country boasts of “governance reforms and the structural reforms that have been implemented by the government which have resulted in significant improvements in our standings in global governance and competitiveness surveys,” Tetangco said.
“We believe this recognition would happen sooner rather than later,” he added.
Last week, S&P made a surprise upgrade on the Philippines’ credit rating to BBB “with a stable outlook”— the highest the country has received so far from any credit rating firm.
Moody’s, meanwhile, raised its rating on the country last October to Baa3 with a positive outlook. A positive outlook means further credit rating hike may be done in the next 12 to 18 months.
Tetangco said the country may see a return of capital following S&P’s move, which was done due to the belief that ongoing reforms being implemented by the Aquino administration will continue beyond 2016.
“We can expect new inflows as a result of the upgrade. These, in addition to the inflows that we have seen since April — i.e., some reversal of the outflows that occurred in first quarter. Indeed, the upgrade should help global markets continue to differentiate,” Tetangco said.
Foreign portfolio investments registered a net outflow of $2.337 billion in the first three months of the year, latest data from the central bank showed. Foreign direct investments, on the other hand, posted a net inflow of $1.377 billion in the first two months of the year.
But the Bangko Sentral ng Pilipinas is not worried about a surge in capital
inflows following an increase in banks’ reserve requirements done in separate policy meetings in March and in May.
“The RR hike… was timely, as it could now also help mitigate the growth in liquidity that could be generated by more inflows. With respect to inflows in general, our policy will continue to be geared towards ensuring that inflows do not generate financial stability concerns. This is consistent with what we have done in the last two meetings,” Tetangco said.