MANILA - A stable debt ratio with an increase in revenue as well as public finances could lead to the country's credit outlook upgrade from negative to positive, Fitch Ratings said Tuesday.
Fitch Ratings on Monday affirmed its BBB rating but it revised the outlook to negative from stable, which means the credit rating could be downgraded in the medium term.
However, the outlook can also improve given the right conditions, Fitch Ratings Director of Sovereigns for Asia Pacific Sagarika Chandra told ANC.
"That’s going to come from the public finances, that’s important. If we find that there’s going to be a stabilization of debt ratios, which is matched by increase in revenue base, that’s a factor that could lead to a positive rating action," Chandra said.
Chandra said the revised outlook was due to "eroding" buffers and the uncertainty of the COVID-19 pandemic including the new variants.
"Last year, we downgraded some countries...and that didn’t happen to the Philippines because, as I was saying, there were certain buffers they had going into the crisis and now we think those buffers have eroded," she said.
Economic managers have said the country's strong fiscal position helped the country weather the COVID-19 pandemic, which had shuttered businesses, leading to job loss for millions.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the effect of the pandemic on the economy is transitory. Diokno on Monday said the country's debt ratio was still in a sustainable level.
Debt watcher S&P Global Ratings in May also affirmed the Philippines' investment-grade credit rating of BBB+ with a stable outlook.
Investment-grade ratings give countries access to lower-interest loans and other benefits.