September 23rd, 2024
House Ways and Means Committee Chair Joey Sarte Salceda (Albay, 2nd district) credited President Marcos’s ‘steady hand in fiscal and economic policy” as “what keeps the country’s prospects strong despite a volatile global environment” as credit rating agency Moody’s affirmed the Philippines’ investment grade rating of Baa2 and outlook as “stable.”
“The global environment is challenging. High energy and food prices persist – and overall sentiment is gloomy, especially with China’s slowdown and continuing challenges in Europe,” Salceda said.
“And yet, the country’s prospects remain strong. This is in large part due to the President’s decisively pro-investment and fiscally responsible policies,” Salceda says.
Salceda adds that he expects “improvements in the country’s investment outlook when pro-investment policies like the CREATE MORE Act kick in.”
CREATE MORE is the Marcos administration’s enhancements to the country’s fiscal incentives regime, with doubled tax deductions for power cost, longer incentive time frames, simplified tax and local business requirements, and a lower corporate income tax rate for registered business enterprises.
“We are also working with the President and the rest of Congress for reforms to boost the capital and investment markets. That will grow our base further.”
Salceda also sees positive signs from the country’s growing balance of payments surplus, from USD 62 million in June to USD 88 million in July, tamed inflation, and an on-schedule approval of the 2025 budget.
“I’m sure we will get an upgrade in rating or outlook from one of the Big Three next year,” Salceda adds, referring to S&P, Moody’s and Fitch.
Last month, Japan-based Rating and Investment Information, Inc. (R&I) upgraded its rating on the Philippines from the “BBB+” with positive outlook last year, to “A-”
“What the Japanese credit rating agencies seem to understand better than the Western credit rating agencies is that the Philippines never defaults on its foreign loans, it has an unbroken line of generally fiscally conservative finance ministers, and it holds the limits to fiscal deficit spending almost like a religious tenet.”
“As our biggest lender, investor, and trading partner, Japan understands this country’s fundamentals better than any other country in the world. And I’m sure the Big Three will follow, especially if growth tracks targets this year.”
“I think, before the end of PBBM’s term in 2028, the country will be at the A-level ratings,” Salceda concluded.