The Investor Relations Office (IRO) of the Bangko Sentral ng Pilipinas said the Philippines has kept its triple “A” rating from a Chinese debt monitor.
China Lianhe Credit Rating Co. Ltd. has affirmed the Philippines’ “AAA” long-term issuer rating with a “stable” outlook, according to a statement released by the IRO on Tuesday.
“According to Lianhe’s sovereign credit rating methodology, a ‘AAA’ rating indicates that a creditor has extremely strong capacity to pay its financial commitments; is highly unlikely to be affected by adverse economic conditions; and has the lowest expectation of default risk,” it emphasized.
Meanwhile, the rating outlook indicates that a rating change is unlikely in the near future.
The IRO said the credit rating agency observed that the Philippines, like many other countries around the world, went through a recession as a result of the coronavirus disease 2019 pandemic.
Nonetheless, the Philippines has handled the pandemic’s impact on its budget, aided in part by revenue generated by tax measures, and is on the mend.
“Although the fiscal deficit widened further, government debt remained within acceptable threshold…Looking forward, the Philippines’ economic and fiscal performances are expected to recover in 2021 and 2022 on the back of gradually easing pandemic and continuous tax reforms,” Lianhe was quoted as saying in its July 28 report.
The credit rating agency anticipates the Philippine economy to grow at a rate of 7 percent in 2021 and 2022.
The outlook matches the government’s 6-7 percent growth target for this year, as well as a rebound from the 9.6 percent contraction in 2020.
The forecast is in line with the government’s 6-7 percent growth goal for this year, as well as a return from the 9.6 percent drop in 2020.
The IRO, for its part, said Lianhe’s recent credit action has given the country’s ability to service financial commitments the highest level of trust, notwithstanding the pandemic’s toll.
“This latest rating action from Lianhe bodes well for the Philippines’ ability to continue accessing financing from Chinese investors, such as via sale of government bonds, at low interest rates,” it added.
BY MEYNARD DELA CERNA