By Ronnel W. Domingo, August 7, 2023; Philippine Daily Inquirer
The government’s economic team wants national agencies in lockstep along the road to an “A” credit rating before the Marcos administration ends and, to ensure this, has mobilized an interagency body to coordinate efforts.
Finance Secretary Benjamin Diokno said in a press briefing that an Inter-Agency Committee on the Road to A Credit Rating Agenda or “IAC on the Road to A” was created as early as 2019 during the previous administration.
Diokno said the Bangko Sentral ng Pilipinas (BSP), of which he was governor, and the Department of Finance organized the IAC with the intention to effectively coordinate the efforts of member agencies to develop, execute and monitor the implementation of the Road to A Roadmap.
The IAC is co-chaired by the BSP deputy governor and the treasurer of the Philippines, with the following government agencies as members—BSP, Bases Conversion and Development Authority, Bureau of the Treasury, Clark Development Corp., Department of Budget and Management, Department of Finance, Department of Public Works and Highways, Department of Transportation, Department of Trade and Industry/Board of Investments, National Economic and Development Authority and Philippine Statistics Authority.
“The IAC aims to enhance engagements with analysts and investors; coordinate engagements with credit rating agencies and third-party raters; and increase the Philippines’ visibility through traditional and technology-based platforms,” Diokno said.
From any of three
In particular, the government wants to achieve an investor-grade sovereign credit rating of “A” from at least one of the three major international rating agencies—Moody’s Investor Service, Fitch Ratings andS&P Global Ratings—as well as Japan-based raters Japan Credit Rating Agency and Rating and Investment Information.
“The IAC has a three-pronged strategy that focuses on achieving solid economic growth; prudent fiscal management; and strong governance standards and institutions,” Diokno said.
He said that an A rating would affirm the Philippines’ creditworthiness and would serve as a strong signal to local and international business and financial communities that the country is conducive to long-term investments.
“In turn, this will increase investment and will eventually help us achieve our long-term economic plans,” Diokno said.
Fitch’s rates the Philippines at BBB, between minimum investment grade of “BB” and minimum A-level of “A” rating.
Moody’s rates the Philippines at “Baa2,” which is one notch above the minimum investment grade of Baa3 in its rating scale. Baa2 is also two notches away from the A-level bottom rung of “A.”
S&P Global rates the Philippines at BBB, which is two notches above the minimum investment grade and a notch away from A-level ratings band.
“It is important to note that we managed to maintain investor-grade ratings even during the pandemic, while other countries were downgraded,” Diokno said. “Furthermore, the Philippines’ credit ratings remain strong compared to select rating peers.”