Stable Debt Ratio With Increasing Income May Lead to Positive Rating Action: Fitch Ratings


Pedestrians cross the intersection of Makati Avenue and Gil Puyat Avenue in Makati City on January 28, 2021. Mark Demayo, ABS-CBN News / File

MANILA – A stable debt ratio with rising incomes as well as public finances could lead to an improvement in the country’s credit outlook from negative to positive, Fitch Ratings said on Tuesday.

Fitch Ratings confirmed its BBB rating on Monday, but revised the outlook from stable to negative, which means the credit rating could be downgraded in the medium term.

However, the outlook may improve under the right conditions as well, Sagarika Chandra, Fitch Ratings director of sovereigns for Asia-Pacific, told the ANC.

“It will come from public finances, it is important. If we see that there is going to be a stabilization of debt ratios, which goes hand in hand with an increase in the income base, it is a factor that could lead to positive rating action, ”Chandra mentioned.

Chandra said the revised outlook was due to “erosion” of buffers and the uncertainty of the COVID-19 pandemic, including new variants.

“Last year we downgraded some countries … and it didn’t happen in the Philippines because like I said there were some pads they had before the crisis and now we think those pads have eroded, ”she said.

Economic officials said the country’s strong fiscal position helped the country weather the COVID-19 pandemic, which had shut down businesses, resulting in the loss of jobs for millions of people.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the effect of the pandemic on the economy is transient. Diokno said on Monday that the country’s debt ratio was still at a sustainable level.

Debt observer S&P Global Ratings also confirmed the Philippines’ investment grade credit rating of BBB + in May with a stable outlook.

Investment ratings give countries access to low-interest loans and other benefits.

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John A. Bogar