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On credit rating agencies’ affirmations of PH growth outlook, credit strength

April 23rd, 2021

Salceda on credit rating agencies’ affirmations of PH growth outlook, credit strength: “Let’s get vaccination right with our fiscal space”

In response to the investment grade credit rating of BBB+ with a “stable” outlook given by Japanese debt watcher Rating and Investment Information Inc. (R&I) to the Philippines, House Ways and Means Chair and Economic Stimulus and Recovery Cluster Co-chair Joey Sarte Salceda (Albay, 2nd district) says that an ambitious vaccination program and a recovery package with incentives for “health-affirming behavior” through Bayanihan 3 will further strengthen the country’s prospects.

“This is a crucial vote of confidence. It also indicates that we have some room for fiscal maneuver. We can afford a more ambitious vaccination and relief program, through Bayanihan 3,” Salceda said.

“The Finance Secretary Dominguez has reiterated that we will look for sources of funding for a third package of relief measures. I think the Executive and Legislative branches both agree that we need lifeline measures to feed our people and expedite vaccination,” Salceda added.

Earlier this month, Salceda revealed that he and the Secretary of Finance agree that the dividend remittances of Government-Owned and Controlled Corporations (GOCCs) should be increased to 75% from 50%, and that new taxes on POGOs and on e-sabong should be passed.

“Just this week, I sent him my comprehensive recommendations on e-sabong taxes. The industry is willing to pay taxes, and we are collecting far too little under current laws, so it’s really an easy direction to take,” Salceda said.

Enact fiscal reforms to prepare for debt payments

Salceda adds that “we can keep our credit ratings strong if we pass fiscal reforms that help us pay for debt in the future.”

“That’s why we’re working with the DOF to curb smuggling and tax abuse through administrative regulations. We are also working with them to pass the remaining packages of tax reform, which I think we can still do before 2022,” Salceda said.

“Debt now is interest and principal payments in the future. So, we have to be careful, only borrowing what we can confidently pay. At the same time, we can borrow more now if we prepare the reforms needed to help pay our borrowings. As long as the reforms are strong, we will be alright,” Salceda explained.

Salceda says that the credit rating affirmations make him more confident that government can finance the P141-billion direct appropriations under Bayanihan 3.

“We need to extend cash aid, because it helps people stay home and comply with COVID standards. I also suggested that we give cash incentives for getting vaccinated, because it will cost you one or two days of queuing and rest,” Salceda explained.

“Bayanihan 3 is of course, not yet stimulus. I think stimulus should come after we can go out already. We just really need a lifeline, a pantawid, until mass vaccination,” Salceda added, hinting at a possible supplemental stimulus package or having it embedded in the 2022 budget.

“In 2022, we should continue to go big with infra and stimulus. The impact of stimulus will really come once we achieve herd immunity. So, I welcome this credit rating affirmation. It means we can afford to go big,” Salceda concluded.

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