Moody's lifts PHL credit outlook to positive

Global debt watcher Moody's Investors Service on Thursday changed its "stable" outlook to "positive" for the Philippine government's "Ba3" foreign and local currency bonds. The decision was prompted by the growing strength in Philippine external payments position, Moody’s said in a statement. "[This] significantly reduced the vulnerability of government finances to external shocks," the credit rating agency said. The Southeast Asian nation’s monetary policy also successfully "anchored inflation expectations and helped lower the government's cost of funding," Moody's said. Another factor was the improved prospects for economic reform policies that will likely "have positive effects on government finances, investor sentiment, and economic growth." These factors helped encourage foreign direct investment and boost domestic consumer confidence. Near-term assessment Moody's said its near-term assessment of the country's credit fundamentals will focus on government's ongoing commitment to fiscal consolidation in the context of an improved economic environment. "Most likely, this will require continued expenditure restraint and improved revenue performance," the international credit rating agency said. Moody’s is closely watching how the Philippine government will actually implement its public-private partnership program for infrastructure development. "As this program forms a key pillar of the Aquino administration's economic agenda, successful execution of associated projects would provide a bellwether for an improved business climate and growth prospects in general," it added. Fiscal, monetary conditions The improved credit rating reflects the international communities' recognition of the fiscal and monetary conditions in the Philippines, said Presidential Communications Development and Strategic Planning Office head Ricky Carandang. "The Aquino administration is encouraged by this development and is continuing its efforts to improve the environment for both portfolio and direct investments," he said, hoping that there will be more ratings upgrade in the future. Finance Secretary Cesar Purisima underscored the "ability or willingness" of the Philippines to pay its debts. "The Philippine economy has been growing positively for the past 47 quarters. The Philippines was growing even at a time when most of the first world went into crisis and that is strong proof that our credit story is strong," Purisima said. The government stays committed to intensify revenue collection and maintain fiscal discipline, he said. "We are strongly committed to fiscal sustainability and consolidation in the near term." National Treasurer Roberto Tan is pleased with the positive outlook given by Moody’s as it "takes cognizance of the strength of the country's economic fundamentals." "We hope that with this favorable outlook change, an upgrade is forthcoming in the [near] future," Tan said. — JE/VS, GMANews.TV