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A-level credit rating part of Diokno’s focus at finance

BANGKO Sentral ng Pilipinas (BSP) governor and incoming Finance chief Benjamin Diokno said the attainment of an A-level credit rating will be part of his main focus as the head of the Department of Finance (DOF).

In a recent speaking engagement with an investor group in Singapore, Diokno said while the pandemic has taken the Philippines ‘Road to A’ project a step backward, he plans to implement policies that will push forward that agenda anew in the coming years.

“Before the pandemic, the Philippines was on its way to an A-level credit rating. The virus set us back temporarily but the Philippine economy remains strong, and the government has sustained the reform momentum,” Diokno said.

“As such, it is not surprising that the rating agencies unanimously affirmed their investment-grade ratings of the Philippines throughout the pandemic despite a wave of downgrades for many advanced and emerging economies,” he added.

At present, the Philippines stands short of attaining an A rating across all major credit watchers: Moody’s rates the country at a Baa2, while S&P Global Ratings at BBB+. Both credit watchers has the country on a “stable outlook,” which means that the country’s rating is not expected to budge in the next 12 to 18 months.

Fitch Ratings, however, rates the Philippines at BBB with a negative outlook, which means it could receive a downgrade should economic conditions deteriorate in the coming months.

“As Finance Secretary under the incoming administration, I will make the attainment of an A- level credit rating as one of the goals of the Economic Team,” Diokno said.

“This can be done by improving tax administration and adopting a fiscal consolidation framework, among others,” he added.

Earlier, Diokno said he intends to focus on streamlining tax administration before deciding on whether the country needs new taxes as part of its fiscal consolidation program.

“The tax system has recently been reformed. There are many changes that were done by the present administration.

There is room for better tax collection,” Diokno said, adding that making the system “taxpayer-friendly” through technology and digitization processes and other reforms  could help make sure enough revenues are
collected.

“Although I said that this [current system] is a better tax system than the previous one, it is not perfect. It could be improved upon. But to me, the focus should really be first, let us implement the new tax system. And then find out if there is a need for further reform,” Diokno said.

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