Fiscal prudence key to recovery

June 26, 2020

Maintaining fiscal prudence to support and improve credit rating is a must for the country in its bid to recover from the impact of the pandemic, Finance Sec. Carlos Dominguez III said.

Dominguez said continued improvement of domestic fundamentals allowed the country to face the pandemic’s impact on a strong position.

He said the proportion of debt to gross domestic product has improved to record-low of 39.6 percent, revenues posted its biggest share to domestic output at 16.1 percent in 2019, inflation remains manageable, and foreign reserves continue to rise, with the end-May 2020 level at $93 billion

He  added right before the health crisis hit the country, the country  received affirmation on its investment grade credit ratings.

Specifically, S&P Global Ratings affirmed its BBB+ rating with stable outlook on the county last May 31, Moody’s Investors Service kept its Baa2 rating with stable outlook last May 12, and Fitch Ratings affirmed its BBB rating but changed the outlook from positive to stable last May 7.

Last June 11, the Japan Credit Rating Agency upgraded its rating on the country from BBB+ to A- as it considers the country to remain strong despite the pandemic.

The DoF chief said the country also remains to be among the most financially sound economies.

“At a time when nearly all governments around the world are taking on debt to fight the economic downturn, we will be competing for scarce financing. By maintaining a prudent fiscal program that has allowed us to protect our credit-worthiness, the commercial markets and the development partners continue to lend to us at generous interest rates and longer terms,” he said.

He added the same advantages are being enjoyed by local firms.

“The ability to refinance at lower cost will help us recover more quickly and more sustainably.This is what makes credit ratings precious to restoring our economy’s health. This is precisely the reason why we are guarding them very well,” he added.