MANILA, Philippines - An upbeat President Aquino yesterday hinted that the Philippines might be able to get more upgrades from credit rating agencies this year, owing to significant improvements in the economy and brighter infrastructure prospects.
“We would be very surprised if there will be no further upgrades given the developments that are happening in the country,” he told businessmen who attended the Philippine Investment Forum at The Peninsula Manila
hotel in Makati City.
He attributed improvements in the local economy to efforts he made to level the playing field, weed out corruption, make efficient government services, provide financial help to the poorest of the poor and pump prime the economy, among others.
In 2011, the Philippines obtained a ratings upgrade from three international credit rating agencies, namely Fitch, Moody’s and Standard and Poor’s, who all acknowledged improvement in good governance implemented by the administration.
Fitch gave a BB+ or one level below investment grade while Moody’s gave BA2 and S&P BB, both two levels below investment grade.
Moody’s hinted recently they are mulling on giving another upgrade this year if Manila manages to trim down its debt.
“We’re operating in the midst of a lot of global uncertainty. That’s a negative factor in our case. We have ratings agencies that have been here for their assessments a few years back and we are very timid,” Aquino noted.
“But I think what is more important is that the market is already responding to the prospects faster than the ratings agencies,” he said, citing as example the 5,000 level breach at the Philippine
Stock Exchange, where 4,000 used to be almost impossible.
“We are being treated, I understand, at the same level or better than those that have already been posted at investment grade,” Aquino added, acknowledging that the “market knows best.”
Phl economy no longer dependent on OFW remittances
Aquino also declared back in December 2011 that the Philippine economy is no longer dependent on remittances of overseas Filipino workers (OFWs) to keep it afloat, and is more focused on “investment-led growth.”
“I think (the reason why) we are a little bit more insulated now points to the fact that we have more investment-led growth rather than purely consumption resulting from OFW remittances,” he told reporters in a chance interview.
Defending members of his economic team from criticisms, Aquino pointed out that the lower-than-expected gross domestic growth for 2011 was due to the fact that domestic economy nowadays is no longer consumption-driven.
“A majority of our
economic growth drivers before comes from remittances and not from productivity here in the country. Before, when the opposition bloc was in the administration, our economy was more consumption driven,” he said in Filipino.
Aquino, for the nth time, justified the 3.2 percent GDP growth during the third quarter, which was way below the economic managers’ projection of a 3.8 to 4.8 percent growth, saying the Philippines does not live in a vacuum, and is affected by the global recession.
This is why the government released its P72-billion stimulus package in October 2011, which is “precisely meant to ameliorate all of these effects brought about by what has been happening in the world economy.”
“Remember Japan had production shortfall after Fukushima affected so many of our semi-conductor industries as well as our vehicle sales, amongst other things. The Middle East issue is also another problem area for us,” Aquino explained.
“Even the Eurozone crisis, the American slowdown – all of that affected us,” he added, highlighting that compared to other economies, the Philippines remained resilient and had in fact been upgraded by credit rating agencies due to prudent and judicious spending.
The President is nevertheless optimistic that growth targets for this year are still achievable, but did not categorically say whether there would be additional funds to the stimulus package, which Budget Secretary Florencio Abad said could have P20 billion more.
“We are hoping and we are marching towards that goal (achieve projected growth targets),” he said.
For one, Education Secretary Armin Luistro updated him on the “substantial improvements” in the government’s efforts to address classroom shortage.
“We’re very close to meeting the target for the classrooms for this year and hopefully that will lay the basis for the really expanded
school building program for next year, among other things,” Aquino revealed.
The same is true in the infrastructure program of the Department of Public Works and Highways (DPWH), even if there had been under spending in 2011, when disbursements were withheld to ensure that beneficiaries get the funds.
“From the DPWH, they have learned from the first two quarters (of 2011) that safeguards have to be built in in order to prevent leakages. So we did not spend unwisely, I think we spent wisely and we’ll have more acceleration in the second semester,” he said.
