Finance Secretary Carlos Dominguez III (File photo)
MANILA -- The Philippines’ credit rating upgrade to “BBB+” is a result of President Rodrigo Duterte’s decision to invest his political capital wisely in “difficult but game-changing reforms”, Finance Secretary Carlos Dominguez III said on Wednesday.
Dominguez said reforms such as the Tax Reform for Acceleration and Inclusion (TRAIN) Law; the Rice Tariffication Act; the “Build, Build, Build” infrastructure program; the country’s skilled workforce is among the keys that have raised the country’s credit rating.
“Even when critics were noisy, President Duterte chose to throw his full support behind meaningful reform because it would benefit the Filipino people,” said Dominguez in a press briefing in Malacañang.
According to Dominguez, economic think tank Standard and Poor (S&P) even cited TRAIN for increasing the government’s ability to fund public investments while relying less on foreign and domestic borrowings.
“When we do borrow, we prioritize official development assistance or ODA as it has cheaper and longer terms of repayment as opposed to borrowing from private capital markets,” Dominguez said.
He said S&P also expressed confidence in the Duterte administration’s efforts to ease inflation, which has decelerated to 4.4 percent in January and further decreased to 3 percent in April which is within the government’s target range of 2 to 4 percent.
Moreover, he noted that “the S&P report validates the soundness of the Duterte administration’s aggressive spending program to address the infrastructure gap.”
The Finance chief, however, clarified that these reforms were not pursued to get a better credit rating but improve lives of Filipinos.
“We did not pursue these reforms to get a better credit rating. This upgrade is the effect of pursuing ‘game-changing reforms’ that would lead to a flourishing economy and more comfortable life for law-abiding Filipinos,” Dominguez said.
“President Duterte’s wise investment of political capital has not only been beneficial to the country, now the administration has more political capital with which to continue his reform agenda,” he added.
Dominguez pointed out that the effect of a BBB+ rating may not be immediate, but described it as “a stepping stone” to sustaining upper-middle income country status in the near future.
“This is a definitive win for the Duterte administration. The Philippines has grown at an impressively rapid rate over the past decade, outpacing many other countries, and S&P believes that we will continue to achieve above-average growth,” Dominguez said. (PNA)
