The Philippines on Thursday achieved an investment grade rating from international credit rating agency Moody's Investor Service. In a statement released by the agency, the sovereign rating of the Government of the Philippines was upgraded from 'Ba1' to 'Baa3' with a positive outlook.
This upgrade by Moody's follows the Philippine sovereign's investment grade rating from Fitch in March and from Standard and Poor's (S&P) in May. Both Fitch and S&P assign a stable outlook to the Philippines’ investment grade rating.
"Clearly, Moody's has acknowledged the strong upside potentials and the constructive dynamics of the economy that should enable it to ride out the volatilities in global financial markets,” says Governor Amando M. Tetangco, Jr. of the Bangko Sentral ng Pilipinas (BSP).
Tetangco adds the development should bode well for more investments, both local and foreign, in the country. "Greater investments should strengthen the base for sustained and inclusive economic growth and usher in a transformative period for the Philippine economy."
In its rationale, Moody's cited the following key drivers for the upgrade: robust economic performance; ongoing fiscal and debt consolidation; and political stability and improved governance. In addition to the 7.6% GDP expansion in the first half of 2013, Moody’shighlighted the stability of the Philippines' funding conditions in the face of recent market volatility in emerging markets as evidence of the country’s resilience to external factors.
Also cited were the low and stable inflation levels as well as the liquidity of the banking system—the only system worldwide deemed by Mood''s to have a positive outlook.
The credit agency also highlighted the Aquino Administration’s popularity and success in institutionalizing its reform agenda.
The positive outlook comes off the back of expectations of continued economic outperformance of the Philippines as compared to its peers in the region as well its continued prospects for reform in the second half of President Aquino’s term in office.