DBM chief sees Philippines bagging credit rating upgrade within the year

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Department of Budget and Management Secretary Benjamin Diokno answers questions from the media during a briefing at the Malacanan Palace on January 03, 2016. — KJ ROSALES/PHILIPPINE STAR

THE DEPARTMENT of Budget and Management (DBM) expects an improvement of the Philippines’ sovereign credit rating this year, noting that it will be favorable for the government’s bid to increase the share of borrowed funds from abroad.

“We are confident that sustaining our fiscal reform agenda, primarily with Tax Reform and Budget Reform, will lead to a credit upgrade within the year,” Budget Secretary Benjamin E. Diokno said in a statement on Monday, April 30.

S&P Global Ratings on Thursday last week raised its outlook for the Philippines to “positive” from “stable,” which implies that the country’s “BBB” rating–a notch above investment grade–could be upgraded in the next six months to two years.

The debt watcher said that it will watch whether the Tax Reform for Acceleration and Inclusion (TRAIN) law would generate lower-than-expected fiscal deficits and whether it would drive down government debt.

The Development Budget Coordination Committee (DBCC) in its meeting on April 24 raised its revenue program, taking into account the higher incremental revenues the TRAIN law would generate in the medium term.

The inter-agency group also revised the borrowing program this year to a 65-35 mix, in favor of local sources, from the 74-26 ratio earlier set for 2018 and the 80-20 portfolio programmed last year.

“A potential credit upgrade will only maximize the benefits of this revised financing program.The economy stands to benefit greatly as it will potentially translate to lower borrowing rates to finance our priority programs and projects,” added Mr. Diokno. — Elijah Joseph C. Tubayan