MANILA - The tax reform and infrastructure development proposals of the Duterte administration could boost the country's credit rating if successfully implemented, global debt-watcher Moody's Investors Service said Tuesday.
"An acceleration of infrastructure development and the passage of comprehensive tax reform would be credit positive,” Moody’s said in its latest commentary on the Philippines.
A sustained growth in government revenues and further improvement in its external debt profile could also drive the country’s credit rating moving forward, it added.
The debt watcher said political risk in the country is low, but the war on drugs and the tough rhetoric of President Rodrigo Duterte has the potential to affect security and trade relations.
“In the absence of a well-formulated articulation of the Duterte government’s foreign policy, geopolitical risks have become more unpredictable, although still low,” it said.
Moody’s has assigned a rating of “Baa2” for the Philippines, a notch above the minimum investment grade, with a “stable” outlook.
Moody’s also upgraded the country’s economic growth forecasts for the next two years.
“We expect the largely domestic drivers of growth to remain intact over the next year. Overall, we expect real GDP [gross domestic product] growth to remain at around 6.5 percent in 2016 and 2017,” the debt watcher said.