Published by the Visayan Daily Star Publications, Inc.
|NINFA R. LEONARDIA|
Editor-in-Chief & President
NIDA A. BUENAFE
MAJA P. DELY
ANTONIO L. LEONARDIA|
Just a little more than a month after the Philippines won its first ever investment grade debt rating from global credit rating firm Fitch on March 27 this year, the international credit rating firm Standard & Poors also upgraded our country’s credit rating. S&P credit analyst Agost Benard says that the upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt.
A country that receives an investment grade essentially gets a seal of good housekeeping that tells investors that it is safe to do business in the country and encourages them to infuse huge capital. It also means that, as a borrowing country, the Philippines has a strong ability to pay its debts. This translates to lower borrowing costs and generates savings that can be spent on better social services. For the man on the street, it could mean better education and health care and possibly more affordable loans for major purchases.
As the Aquino administration revels in this historic feat, its spokespeople are wasting time in downplaying the role of the Arroyo administration in achieving this goal. While President Aquino’s style of governance may have earned the confidence of investors and credit rating agencies and propelled our economy to where it is right now, we cannot deny the good work that the previous administration has done in laying down the groundwork, such as the Value Added Tax, that made general government debt dynamics more resilient to shocks. What is important now is for the Aquino administration to find a way to sustain and institutionalize this level of confidence and growth because it would be a shame to see all these achievements go to waste once PNoy’s “Daan na tuwid” finally comes to an end in 2016.
There is also the challenge of making the rest of the Filipinos, especially those who call themselves poor, benefit from this upgrade. Authorities have to find ways to make growth truly inclusive and translate these ratings and investments into more and better jobs.
Getting that historic investment grade rating is not the final goal. It is just the beginning of the next level. Hopefully, our country and its officials are ready and willing to tackle that next level.*