S&P maintains BBB + rating, outlook stable for PH with economy ‘starting to recover’
Metro Manila (CNN Philippines, May 27) – S&P Global Ratings has maintained its credit rating for the Philippines despite the massive COVID-19 health crisis, noting that the national economy is “starting to recover.”
The Global Debt Monitor said he had confirmed his “BBB +” credit rating for the country. A notch closer to the minimum grade of level “A”, this testifies to the stability of the national economy and the capacity of the government to repay its loans. Better odds allow nations to benefit from cheaper debts abroad.
“[W]We believe the Philippines will continue to have good prospects for economic recovery once the COVID-19 pandemic is contained, and the government’s fiscal performance will strengthen as a result, ”S&P said in a statement Thursday.
The credit assessor also kept its outlook “stable” for the Philippine economy, expecting it to rebound to “healthy growth rates”. With better control of the pandemic, the state’s budgetary performance will improve “materially”, he said.
“Although the government’s fiscal and debt parameters have deteriorated due to the economic fallout from the COVID-19 pandemic and associated extraordinary policy responses, its long history of fiscal prudence has provided a buffer for key indicators,” he said. explained S&P.
He noted that the Philippines’ net debt rose to 38.5% of gross domestic production in 2020 from 28.9% in 2019. While S&P predicts that figure will rise to 41.7% this year, authorities backing an otherwise “fragile” economic recovery, he notes that this figure is “comparable or lower” than that of the country’s international peers.
The government has resorted to borrowing both nationally and multilaterally, as it strengthens its war chest against highly contagious diseases. The loans also cover his acquisition of COVID-19 shots.
While S&P expects economic output to rebound at a slow pace this year – with the recent surge in coronavirus infections in Luzon being a huge factor – it still forecasts GDP growth of 7.9% in 2021.
“This will largely be due to the base effects, but will also be driven by a wider deployment of vaccines, a recovery in the global economy and the government’s expansionary fiscal measures,” he said, adding that more inoculations will allow economic activities to normalize more quickly towards the end of the year.
S & P’s forecast is well above the Economics Team’s reduced 6-7% growth target range for the economy this year.
Finance Secretary Carlos Dominguez welcomed the note’s assertion, noting how the country’s “strong financial cushions and prudent fiscal management” have provided it with a relatively strong position to find funds for its pandemic response ” without triggering a worrying debt situation later. ”
The national debt stock exceeded £ 10.7 trillion at the end of March, according to Treasury Office data.
The finance chief also said the development supports hopes of bringing the Philippines’ debt and deficit ratios and growth trajectory back to pre-COVID-19 levels.
“S & P’s decision to maintain the country’s BBB + credit rating echoes our view that the impact of the COVID-19 crisis on the economy will be transient and that the Philippines continues to enjoy good growth prospects in the medium term, ”said Bangko Sentral ng Pilipinas. Governor Benjamin Diokno.
S&P also said it hopes economic growth accelerates even further in 2022 as COVID-19 vaccinations increase and the health crisis becomes more contained.
The Philippines currently remains in recession, with a 4.2% contraction in the first quarter of the year following a 9.6% full-year contraction in 2020, as quarantine restrictions continue to dampen consumer activity and companies.