MANILA – The goal for an A-level credit rating by 2022 remains but efforts towards this need to be sidelined a bit because the primary task now is to lift the Philippine economy from the pandemic.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, in a briefing aired over the central bank’s Facebook page Thursday, said the coronavirus disease 2019 (Covid-19) “pandemic hit the Philippines at a time when we are on a roll.”
“The economy (and) the macroeconomic fundamentals are sound but unfortunately we, just like the rest of the world, are suffering so the road to A might take a backseat at the moment,” he said.
In the first quarter this year, growth, as measured by gross domestic product (GDP), contracted by 0.2 percent from quarter-ago’s 6.4 percent and year-ago’s 5.6 percent, the first since the fourth quarter of 1998, or after 84 consecutive quarters of growth.
The decline was traced to the impact of the Taal Volcano eruption last January and the global pandemic that affected the tourism industry, manufacturing, and transportation and storage, among others.
Diokno said authorities’ “concern really right now is to help our people rather than maybe pursuing our road to A.’
To date, the country’s credit rating is BBB+ with Stable outlook from S&P Global Ratings, BBB with Stable outlook from Fitch Ratings, and Baa2 with Stable outlook from Moody’s Investors Service.
Last year, economic managers said they aimed to achieve an A-level credit within the next two years due to continued improvement of domestic fundamentals.
However, the pandemic has made economic managers revise the economic targets with the deficit seen to rise to around PHP1 trillion this year from about PHP677.6 billion, or around 3.2 percent of GDP.
Diokno said “although we are still confident that we may achieve A rating by 2022 we are going to increase our deficit from 3.2 percent to 5.3 to 5.5 percent of GDP.”
He added the government will also increase borrowings to finance its Covid-19 response, but added this “is again allowed or permissible under current circumstances” also because of the decline in the debt-to-GDP ratio to around 39.6 percent.
Diokno is open to the possibility that achieving an A rating by 2022 may or may not happen.
“The BSP and the national government will remain focused on pursuing appropriate policies and the necessary structural reforms to put the economy back on its high growth trajectory and create more jobs to improve the lives of our people,” he added. (PNA)
