Fitch Ratings, one of the big three credit rating agencies, has raised the Philippine credit rating to stable or good quality and forecasts a 6.8 percent economic growth for 2017.
Socioeconomic Planning Secretary Ernesto Pernia says the rating is a welcome development especially at a time of a sustained improvement in government spending.
Fitch’s rating indicates that expectations of default risk are currently low and capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.
“The upgraded rating reflects the steady and strong economic performance of the Philippines and the firm confidence of investors,” says Secretary Pernia.
“This positive outlook and ratings from global credit watchers encourage the whole of government to be more efficient and swift in executing the needed policy reforms, programs and projects laid out in the Philippine Development Plan 2017-2022.”
Secretary Pernia has urged everyone to support the critical tax and regulatory reforms needed to sustain and even ramp up economic growth.
The Duterte administration is expecting that the Tax Reform for Acceleration and Inclusion Act will be implemented as soon as it is enacted into law before year-end.
“This tax reform package will boost the country’s revenue-to-GDP ratio, fund the Build, Build, Build program, and also increase the spending capacity of the poor and the working Filipino,” says Pernia.
The government’s “Build, Build, Build” program is expected to accelerate public construction spending in line with the government’s target to raise infrastructure spending to reach up to 7.4% of GDP by 2022.
“This will intensify investments on public infrastructure to improve connectivity and ease the cost of doing business in the country. We are pushing to ease of the entry of foreign investments to take advantage of foreigners’ interest in our country,” says Pernia.
The Economic Development Cluster (EDC) has recently approved the recommendations of the 11th Regular Foreign Investment Negative List (RFINL) which cover easing of restrictions on the practice of professions, mass media, communications, educational institutions and health-related sector.
Secretary Pernia says the Fitch forecast of Philippine GDP growth of 6.8 percent affirms that the country’s economic performance will be consistent, as the economy is poised to be one of the fastest- growing in Asia.