Fitch Ratings raises outlook for Philippines to positive from stable
Fitch Ratings raised its outlook on the Philippines to positive from stable even as it affirmed its BBB rating and sees the country as ''among the fastest-growing economies in the Asia-Pacific region in 2020-2021.''
On Tuesday, Fitch said the revised outlook ''reflects Fitch's expectations of continued adherence to a sound macroeconomic policy framework that will support high growth rates with moderate inflation, progress on fiscal reforms that should keep government debt within manageable levels and continued resilience in its external finances.''
Fitch expects Fitch expects growth to come in at 6.4 percent and 6.5 percent in 2020 and 2021, after slowing to 5.9 percent in 2019.
Growth will be supported by strong private consumption and rising public infrastructure investment, it said.
''On current projections, the Philippines will remain among the fastest-growing economies in the Asia-Pacific region in 2020-2021, well above the current 'BBB' median,'' said Fitch.
The ratings agency said it ''assumes policy continuity in the near term as the president's term expires in 2022. ''
''A decisive victory in the mid-term elections last year should continue to support the administration's ability to implement its policy agenda.'' added Fitch.
Bangko Sentral ng Pilipinas Governor Ben Diokno said in a statement: ''“We deserve a credit rating upgrade from Fitch, and the ‘positive’ outlook should soon lead us there.''
''Over the last few years, we have posted notable strides in making our economic growth more inclusive, as evidenced by the significant declines in the unemployment rate and poverty incidence. Moving forward, we expect this momentum to be sustained, as we invest more in our future,'' said Socioeconomic Planning Secretary Ernesto Pernia.
Fiscal profile is seen improving over the coming year, supported by continued progress on tax reforms, which should lead to higher government revenues, said Fitch.
Package 2+ was passed in January 2019, raising excise taxes on alcohol, heated tobacco, and vapor products.
''We expect revenue gains from this package and tax package 1A, passed in 2017, to raise central government revenues to about 16.9 percent of GDP from an estimated 16.7 percent in 2019,'' Fitch said.
The Philippines expect to pass an additional package, package 2, this year, which the Senate has yet to approve.
''The package is designed to be broadly revenue neutral, but aims to boost investment activity and growth over the medium term by lowering the corporate income tax rate gradually from 30 percent to 20 percent and redirecting and narrowing fiscal incentives to more strategic industries,'' Fitch said. DMS
