MANILA — President Ferdinand Marcos Jr on Monday said the Philippines is gearing up not only to reduce poverty and become an upper-middle-income country but also to reach the highest investment grade credit rating territory in the next few years.
Moody's Investor Service earlier affirmed the Philippines Baa2 ratings with a "stable" outlook. The Baa2 rating is just a notch lower than the A ratings category.
The Philippines also has investment grade ratings from other credit rating agencies, which it was able to maintain despite accelerated borrowings during the COVID-19 pandemic.
Having an investment grade rating means access to more funds at lower interest rates. It also means reduced credit risk or that a borrower can pay its debts.
"Our economy’s resilience to crisis is recognized internationally, the Philippines has maintained its investment grade credit rating throughout the pandemic amid the wave of rating downgrade globally," Marcos said during a speech at the New York Stock Exchange on the sideline of his trip to the US to deliver an address at the United Nations General Assembly.
"As we look forward to achieving upper middle income status, we are also gearing up for A territory credit rating in the medium term," he added.
Without the pandemic, the Philippines could have already achieved the upper-middle-income country category. But due to COVID-19 disruptions, it can now be achieved by 2024, economic managers have said.
Getting a higher investment grade rating, as well as reducing the poverty rate to a single digit by 2028 are possible with sound fiscal management, among others, Marcos said.
Unemployment improved to just 5.2 percent in July from a steep drop to 17.8 percent in April 2020.
Marcos said both manufacturing and trade activities also improved in the recent months.
Lowering debt-to-GDP ratio from a high of 63.5 percent will also help achieve goals, he said. Marcos said the administration's "commitment to fiscal discipline" lowered to debt-to-GDP ratio to 62.1 percent as of the end of June. The global standard is 60 percent.
"Although our borrowings increase substantially during the pandemic, we continue to reduce the cost of our public debt due to judicious debt management. Now that the economy is reverting to normalcy, the government is likewise heading back to the path of fiscal consolidation," he said.
"We will reduce debt-to-GDP ratio to below 60 percent by 2025 and further down to 51.2 percent by the end of my term in 2028," he added.
The Philippines also has a hefty gross international reserves, supported by remittances from overseas Filipinos, business process outsourcing receipts as well as inflows from foreign direct investments, he said.
Data showed that the country's gross international reserves stood at $98.8 billion in July.
Marcos said the country's near-term priority included protecting the purchasing power of families, managing the surging inflation, and reducing the scarring effects of the pandemic, among others.
"Despite external headwinds, the Philippine economy’s resilience reinforced by sound policies and decisive leadership makes us confident of our future," he said.