The Bangko Sentral ng Pilipinas (BSP) is confident that the Philippines will achieve its goal of being an investment grade economy “sooner rather than later” given the continued improvement of the fundamentals.
BSP Gov. Amando Tetangco Jr. said “consecutive rating actions on Philippines indeed recognize the efforts toward fiscal consolidation, the continued strength of the country’s external position and the strides the government has made on improving governance.”
“As we continue on the economic reform agenda, we can expect investment grade sooner rather than later,” he said.
The country received eight positive ratings action within the last two years from major rating agencies.
To date, both the Standard and Poor’s (S&P) and Fitch Ratings have a ‘BB+’ rating for the country, a notch away from investment grade, with a “stable” outlook.
Moody’s Investors Service, meanwhile, gives the country a ‘Ba2’ rating, two notches below investment grade but the outlook is “positive.”
Tetangco said the improvement in the country’s credit rating due to better fundamentals “should open the country to more foreign investments of the structural (rather than the flighty) kind, which should help us in building the infrastructure that would secure long-term sustainable growth.”
“We are confident that as the governance reform agenda goes into full swing and leakages are better plugged, we would see each dollar (or peso) invested in the country “work harder,” he stressed.
Similarly, Tetangco said monetary officials “are pleased” that President Aquino mentioned in his third State of the Nation Address (Sona)  the strong external position of the country.
As of last June, the country’s gross international reserves (GIR) totalled to $76.3 billion.
The central bank said the latest foreign reserves of the country is enough to cover 11.2 months worth of imports of goods and payments of services and income and is equivalent to 10.3 times the country’s short-term external debt based on original maturity.
The robust external position, Tetangco stressed, enables the country “to commit funds toward regional and global cooperative efforts... efforts to limit contagion from weaknesses in the advanced economies to our part of the world.”
The Philippines recently committed $1 billion to the International Monetary Fund that will be included in the pool of funds, which the Washington-based lender will extend as loans to countries in the Eurozone that are now suffering debt crisis.