07 October 2013

Improving Credibility to the International Community

Apart from the credit rating upgrade given by Fitch and Standard & Poor’s earlier this year, the recent and third investment rating upgrade has cemented the Philippines’ascent to investment grade status and perhaps improves the image and credibility of the Philippine economy to the international community.

With the Baa3 investment grade rating from Moody’s Investors Service, it brings so many things to the Philippine economy most especially that it also has a positive credit outlook. So, the higher the grade, the more credible the borrower and the lower the cost of debt. Although many have anticipated this development to come yet it is crucial in attracting more investments pouring in to the country. And with a robust economic performance since last year that grew 6.8 percent and 7.6 in the first half this year, the Philippines could become the latest investment hub of the world.

And according to experts, the latest investment rating upgrade means a good image for the Philippines in attracting more investments, that it is safe to do business; it lowers the interest in the borrowing cost as it signifies a strong capability to pay its debt; it reduces the cost of government development including the companies in the country, making it a lot easier to expand and lastly, more budget for infrastructure and social services spending. Although it may not translate into jobs or lower the rate of poverty unless reforms are made in improving the business environment and loosen up restrictions on foreign direct investments.

Moody’s has stated that the Philippine economy’s fast growth despite a slowing global economy was supported by steady overseas Filipino remittance inflows and healthy credit growth. And hopefully that should sustain the Philippines’ strong economic growth hence improving its credibility to the international community.

Image from Rappler.com

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