FITCH RATINGS and Moody’s Ratings will stick to their views on the Philippines’ prospects even in the face of the flood control scandal, the Department of Budget and Management (DBM) said.
Budget Undersecretary and Principal Economist Joselito R. Basilio said the two credit-rating agencies “verbally” affirmed their outlooks for the Philippines.
“(Fitch Ratings knows) that (the scandal) will only improve the way we do things. It will result in reform,” he told reporters on the sidelines of an event on Monday.
“Tapos alam nila ’yung internal, domestic economy is resilient (And they know that the domestic economy is resilient),” he added.
On Monday, Fitch Ratings issued a peer credit analysis flagging the potential impact of the ongoing corruption scandal on the Philippines’ growth outlook.
It retained its gross domestic product projection at 5.6% this year, within the government’s 5.5-6.5% goal.
Fitch Ratings last affirmed its “BBB” long-term foreign-currency issuer default rating and “stable” outlook for the Philippines in April.
A “stable” outlook means the Philippines will likely maintain its rating in the next 18 to 24 months.
Meanwhile, Moody’s Ratings last affirmed the Philippines’ investment-grade “Baa2” rating and “stable” outlook in August last year.
Mr. Basilio said both credit raters asked the government about the flood control issue during a meeting in Washington earlier this month.
“Nagtanong sila ng madami, but… they know that this will only improve processes. At saka wala silang sinasabing growth impact (They asked a lot of questions, but they know that this will only improve processes. And they didn’t say anything about its impact on growth),” he said.
Government officials and private contractors are under scrutiny over the alleged misuse of government funds in substandard or non-existent flood control projects.
Finance Secretary Ralph G. Recto has said that the controversy derailed a potential credit rating upgrade from S&P Global Ratings.
S&P Global affirmed its “BBB+” long-term credit rating for the Philippines in November.
It also upgraded its outlook to “positive” from “stable,” giving the country an opportunity to improve its credit rating in the next two years if it maintains its improvements. — Katherine K. Chan