Korean debt watcher keeps investment grade rating for Philippines
MANILA, Philippines — South Korea-based credit rating company NICE Investors Service has retained the BBB rating of the Philippines amid the country’s ability to weather external headwinds and the government’s prudent tax and spending policies.
“The policy direction of the Duterte administration that is set to increase government expenditure through expanding the tax base is deemed appropriate, given the need for infrastructure investment. The government’s tax reform and infrastructure investment acceleration are already showing tangible effects in 2018,” NICE said in its latest report on the Philippines released Oct. 31.
Noting the volatility in the foreign exchange market globally as a result of the US-China trade war and interest rate hikes in advanced economies, NICE said the impact will be appropriately managed, “given the country’s response capability in terms of forex liquidity.”
The first package of the Duterte administration’s tax reform – Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law – took effect in January this year, generating net revenues for the government, helping fund the Build Build Build initiative.
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The existing rating of the Korean debt watcher is a notch above the minimum investment grade. It has also assigned a “stable” outlook on the Philippines, given perceived absence of factors that can materially affect the country’s creditworthiness over the short term. Miguel de Guzman/File
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“The policy direction of the Duterte administration that is set to increase government expenditure through expanding the tax base is deemed appropriate, given the need for infrastructure investment. The government’s tax reform and infrastructure investment acceleration are already showing tangible effects in 2018,” NICE said in its latest report on the Philippines released Oct. 31.
The first package of the Duterte administration’s tax reform – Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law – took effect in January this year, generating net revenues for the government, helping fund the Build Build Build initiative.
Among other provisions, the law slashed individual income tax rates, and adjusted excise taxes on oil, automobile sales, and sugary drinks.
NICE said the country’s gross domestic product (GDP) would expand by 6.3 percent this year, slightly lower than last year’s 6.7 percent.
NICE also said elevated inflation this year is not expected to undermine the country’s short-term macroeconomic stability, especially with the BSP’s exhibited commitment to price stability.
Inflation accelerated this year largely on account of supply-side factors and is not expected to be persistent. It averaged five percent in the first nine months of the year, exceeding the BSP’s two to four percent.
The series of tightening measures adopted by the central bank is expected to rein in inflation expectations and address second round effects.
NICE said the country’s gross domestic product (GDP) would expand by 6.3 percent this year, slightly lower than last year’s 6.7 percent.
NICE also said elevated inflation this year is not expected to undermine the country’s short-term macroeconomic stability, especially with the BSP’s exhibited commitment to price stability.
Inflation accelerated this year largely on account of supply-side factors and is not expected to be persistent. It averaged five percent in the first nine months of the year, exceeding the BSP’s two to four percent.
The series of tightening measures adopted by the central bank is expected to rein in inflation expectations and address second round effects.
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