President Aquino welcomes credit rating upgrade granted by Standard & Poor's

July 5, 2012 9:28 pm 

MANILA, July 5 — President Benigno S. Aquino III welcomed the latest upgrade granted by the international credit rating agency Standard & Poor's (S&P) on the Philippines which has improved to BB+, thereby inching another step closer toward getting an investment grade status.

Speaking to reporters in a chance interview at the World Trade Center on Thursday, President Aquino said this development shows just how well-managed are the fiscal policies of the Philippines that it would allow the government to have more breathing room in paying the country’s debt.

“Credit rating agency sila at sinasabi na well-managed tayo, maayos ‘yung ating fiscal policies, bumababa ang ating debt payment dahil nagkakaroon tayo ng access to loans and that the lenders will think that we are less of a risk,” the Chief Executive noted.

President Aquino added that even if the Philippines has not yet been given an investment grade status by the S&P, some international banks and other financial institutions are already treating the country as having such following these credit rating upgrades.

“Parang pagkatanda ko sa report ni Finance Secretary Cesar Purisima, four notches above our rating na…ibig sabihin, tinatrato na tayo ng mga pinagkaka-utangan nating mga institusyon, bangko, etcetera na parang investment grade na tayo… bagama't itong mga nagre-rate ay hindi pa tayo nilagay sa investment grade,” he said.

“Sa atin pong pananaw, ‘yung mga bangko ang mas nagiging realistic. Parang mas sigurado silang eto ang karapat-dapat na ipataw na interes sa atin dahil mas mababa na ang risk sa pagpapautang sa atin,” he added.

Meanwhile, Budget and Management Secretary Florencio Abad echoed the President’s remarks as he thanked the S&P for its favorable assessment of the Philippines’ sovereign credit and for its recognition of the progress being made by the Aquino administration in ensuring fiscal stability through improved revenue administration and prudent and effective public expenditure.

“We remain committed to fiscal consolidation. Due to our reform efforts, the national government incurred interest payment savings of P49.33 billion or 11 percent of what was programmed for January 2011 to May 2012. Next year, we are programmed to bringing our fiscal deficit down to 2 percent of gross domestic product (GDP) from 3.5 percent in 2010, as well as lowering our debt stock to 49.5 percent of GDP from 52.4 percent in 2010,” Abad said in a statement.

Abad noted that this credit upgrade by S&P "will bolster our chances to meet or even surpass our fiscal consolidation targets and it will also enable us to reduce the interest cost of our debt and swap our foreign currency-denominated credit into less volatile peso instruments."

“This upgrade validates President Aquino’s platform of good governance as a driver for sustainable economic growth. Buoyed by eight positive credit actions already posted under this administration, the country is now better-positioned to aim for investment-grade credit status and, more importantly, for meaningful economic growth,” Abad said.

For his part, Presidential Spokesman Edwin Lacierda said the country's upgraded credit rating from 'BB' to 'BB+' is a reaffirmation of the confidence that the international community has for the country given the favorable developments happening within.

"S&P cited the increasing fiscal flexibility of the Philippines as one of the key reasons behind the upgrade. Indeed, this fiscal space has allowed us to focus our efforts on investing on both our physical and social infrastructure," Lacierda said.

“The upgrade complements several of the country’s positive economic indicators. Our economy had grown 6.4 percent within the first quarter of this year, compared to 4.9 percent in the same period last year. Inflation, too, has eased to 2.8 percent in June 2012, from 2.9 percent last month. Compared to the inflation rate of the same period last year, which stood at 5.2 percent, this is a significant deceleration,” he added.

“We are confident that through the sustained application of programs geared towards inclusive growth, our interventions will result in, over the long term, a continuous improvement of the Filipino’s quality of life. The Pantawid Pamilyang Pilipino Program (4Ps) has enrolled over three million family beneficiaries as of April this year. More of our countrymen now have access to a comprehensive package for education, healthcare, and family development,” Lacierda said further.

Lacierda said that this convergence of positive economic and social indicators is a tangible result of the reforms established by the Aquino administration. “We remain committed to strengthening our efforts to ensure that the benefits of our growth are both equitable and inclusive,” he said. (PNA) scs/PCOO/ssc

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