MANILA, Philippines – Finance Secretary Carlos Dominguez has assured officials of S&P Global Ratings the country is capable of maintaining a strong economic performance under the Duterte administration.
“While we greatly value a ratings upgrade to full investment grade…this is only of secondary importance,” Dominguez said.
“In the economic plans we lay down, rapidly reducing poverty rates rank first priority,” he added. The statement was sent to reporters yesterday.
The finance chief met with representatives from S&P in Washington after the latter warned that policy stability and predictability has “diminished somewhat” under the 100-day-old Duterte administration.
In particular, the debt watcher expressed concern about President Duterte’s war on drugs that allegedly contributed to human rights violations and “undermined respect” to institutions such as the judiciary and media.
Dominguez, in the statement, appeared to have not addressed these issues and focused on plans to increase spending and reform taxes to cut poverty rate to 17 from 26 percent.
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“Our people expect this. Our government fully intends to meet that expectation. We do not plan on failing the poorest of the poor,” he said.
“This goal cannot be accomplished without sustained economic growth. Over the next six years, driven by investments and targeted public spending, we expect to sustain GDP growth at seven percent or more,” Dominguez said.
“We intend to make our economic growth more inclusive,” he added.
S&P, in evaluating the Philippines, had already acknowledged the positive impact from the new government’s fiscal and economic policies.
It even forecast the budget deficit to average only around one percent between this year and 2018, lower than the adjusted cap of three percent.
“We estimate the deficits will allow the net general government debt burden to decline…which represents a ratings strength,” S&P said when it kept its BBB rating, with a stable outlook for the Philippines.
A credit rating measures the capacity of a country or entity to settle its debts. A higher rating usually means lower interest rates on liabilities and vice versa.
Dominguez said more investments will be undertaken. “The sustainability of our economic expansion makes (these) economic investments necessary,” he said.
