NextGen Day

MANILA – Fitch Ratings reaffirmed the Philippines’ “BBB” rating on Friday, citing the country’s strong external position. However, it maintained a negative outlook, citing the country’s weaknesses in per capita income, governance standards, and human development.

The debt rating agency said in a report that the country’s latest rating action “reflects weak government revenue mobilization compared to peers and government debt/GDP (gross domestic product) that has risen sharply from pre-Covid-19 pandemic levels but is forecast to remain close to the ‘BBB’ median over the next few years.”

“The Negative Outlook reflects uncertainty regarding medium-term growth expectations, as well as potential problems in unwinding the policy response to the health crisis and bringing government debt on a stable downward path,” the report stated.

The credit rating agency expects the domestic economy to increase 6.9% this year and 7% next year, both higher than the 5.6 percent output last year.

For 2022, economists expect a growth rate of 7 to 9%, with a growth rate of 6 to 7% for 2023 to 2024.

Domestic growth is expected to be boosted by an increase in the rate of immunization against the coronavirus disease 2019 (Covid-19), a decrease in Covid-19 cases, and the restoration of economic activities, according to the research.

Increased government infrastructure spending, according to the debt rater, is a benefit for the country’s economic growth.

Infrastructure spending was anticipated to have reached 5.6 percent of GDP last year, up from 4.8 percent the year before.

They expect it to climb to 5.9% this year before falling to 5.5 and 5.4 percent in the next two years.

The increase in government infrastructure expenditure is expected to “assist in addressing infrastructural deficiencies that have stifled the country’s growth potential,” according to the report.

“The fiscal and monetary policy responses, as well as solid infrastructure expenditure and resilient remittances and exports, are all helping to bolster the recovery,” it noted.

However, the potential economic impact on medium-term growth and the hazards provided by additional Covid-19 versions are considered as countering these growth drivers.

“Presidential elections due for May 2022 also raise uncertainty about the post-election fiscal and economic strategy,” it said. “However, given the Philippines’ record of a generally strong policy framework, we expect broad policy continuity would be maintained.”

Government debt increased relative to GDP as the government spent more to address the pandemic’s impact on vulnerable sectors and mitigate its economic impact.

The government debt-to-GDP ratio was 48.1 percent in 2020, according to Fitch Ratings, and it was anticipated to have risen to 54 percent last year.

It is expected to rise to 54.5 percent this year before falling to roughly 53.1 percent the following year.

“The mix of fiscal consolidation and sustained government spending to assist the economic recovery will determine the Philippines’ debt trajectory,” it stated.

The budget deficit is expected to shrink to roughly 7.7% and 6% of GDP this year and next year, respectively, from an estimated 8.4% last year.

“We estimate limited revenue effect from the country’s remaining comprehensive tax reform agenda, which affects real property valuation and assessment as well as passive income and financial intermediary taxation and is expected to be passed before the end of the current administration,” the report noted.

Save/Share this story with QR CODE

---

Disclaimer

This article is for informational purposes only and does not constitute endorsement of any specific technologies or methodologies and financial advice or endorsement of any specific products or services.

📩 Need to get in touch?

Feel free to Email Us for comments, suggestions, reviews, or anything else.

---

We appreciate your reading. 😊Simple Ways To Say Thanks & Support Us:
1.) ❤️GIVE A TIP. Send a small donation thru Paypal😊❤️
Your DONATION will be used to fund and maintain NEXTGENDAY.com
Subscribers in the Philippines can make donations to mobile number 0917 906 3081, thru GCash.
3.) 🛒 BUY or SIGN UP to our AFFILIATE PARTNERS.
4.) 👍 Give this news article a THUMBS UP, and Leave a Comment (at Least Five Words).

---

AFFILIATE PARTNERS

World Class Nutritional Supplements - Buy Highest Quality Products, Purest Most Healthy Ingredients, Direct to your Door! Up to 90% OFF.
Join LiveGood Today - A company created to satisfy the world's most demanding leaders and entrepreneurs, with the best compensation plan today.

---