Philippines Moody's Credit Rating Increased

A June 15, 2011 press release by the Department of Budget and Management

Budget and Management Secretary Florencio B. Abad today welcomed the recent upgrade in the government’s credit rating by Moody’s Investor Service as it is a sign that the positive changes initiated by the Aquino administration are taking effect.

“This recognizes the reforms that the Aquino administration initiated, particularly in the areas of governance and fiscal management. This inspires and energizes us to go deeper in pursuing reform and in ensuring focused and efficient use of public funds,” he said.

“With the upgrade in credit ratings, the government can ensure better access to affordable financing and better loan terms for its critical development programs and projects. The upgrade also helps our country become a more favourable destination for investments,” he said.

In a statement issued on Wednesday, Moody’s said the recent credit rating upgrade is due to expenditure restraint and an upturn in revenue generation, coupled with the sustained nature of macroeconomic stability and strength in its external payments position.

Moody’s said that “by demonstrating firm fiscal restraint, the government has bolstered its policy credibility and has improved prospects for reform.” It further noted that owing to continued prudence in macroeconomic management, solid growth momentum in the Philippines has not produced substantial overheating pressures –either through inflation or a large deterioration in the current account.

In particular, those upgraded where the Philippines’ foreign and local currency long-term bond ratings (to Ba2 from Ba3), its long-term foreign currency bond ceiling (to Baa3 from Ba1) and long-term foreign currency deposit ceiling (to Ba2 from Ba3).