The Duterte administration is now taking credit for ushering economic reforms that it said led to the country receiving the highest credit rating in history.
With the Philippines being assigned a stable “BBB+” rating from S&P Global Ratings, Malacañang said it means a borrower country is a “creditworthy sovereign that can have access to a wider pool of funds.”
“The Palace is pleased with the report from global debt watcher, Standard & Poor’s, that the Philippines has received a credit rating upgrade of BBB+ stable outlook, a step closer to bagging a single ‘A’ grade,” said Presidential Spokesman and Chief Presidential Legal Counsel Salvador S. Panelo.
According to the government’s Investors Relations Office, a rating within the A scale will place the Philippines on the radar of even more investors.
“The economic team of the President has done a splendid job in putting the economic house in order and spearheading bold economic reforms, in cooperation with Congress, in bolstering the domestic economy, which is projected to become the world’s top 25 economy,” Panelo said. “These reforms include tax reform, liberalization of the rice sector, strengthening of the Bangko Sentral ng Pilipinas’s charter, ease of doing business, relaxing the foreign investment negative list and modernizing infrastructure, among others.”
Moreover, the Palace said the President also understands that the economy will thrive under an environment free from drugs, crime and corruption.
“His actions based on this belief have thus promoted our country’s standing not just in peace and order but also in terms of our economy,” he said. But Jose Enrique A. Africa, executive director of the nongovernment Ibon Foundation Inc., said the Palace’s enthusiasm is “unwarranted” as it added that the “benefits of the upgrade are greatly exaggerated.”
“The credit rating upgrade is on the back of the regressive [tax reform] law since last year, which disproportionately burdens the majority poorest Filipinos,” Africa said.
While the country has been getting credit upgrades for over a decade since 2009 and has been on an investment grade over six years since March 2013, the Duterte watch is still seeing the “worst job creation in nine administrations and six decades,” Africa said adding that it also expects the situation to “get even worse” after four straight quarters now of falling employment creation including two quarters of job losses.
Africa cited that the Philippine Statistics Authority’s latest January 2019 labor force survey also showed 387,000 less employed Filipinos now than in the same period last year.
“The importance of the upgrade in stimulating capital inflows shouldn’t be exaggerated as indicating economic progress either already or to come,” he said. “The economy is clearly not progressing because jobs are being lost rather than created.”
Cheap credit is also “meaningless” if this will just go to short-term infrastructure illusions rather than building agricultural and industrial foundations the economy so desperately needs, Africa added.
“More capital inflows will also not mean progress if, as is quite possible, much of this will just go to financial and speculative sectors than the real economy,” he said. “The supposed easier availability of capital abroad will only really be meaningful if the country has solid industrial policy and an agricultural development plan in place, which unfortunately it does not.”