FINANCE SECRETARY Carlos G. Dominguez said a credit rating downgrade for the Philippines is possible, but noted that the ratings agencies are not accounting for the fact that nearly all economies have been beaten down by the pandemic, and called for the need to evaluate them on a new grading curve.

“Of course, there’s a possibility that our credit rating will be downgraded. But the question I have asked the rating agencies and they have not given me the answer: Have we slid down the curve or has the curve been forced downwards? If the curve has been forced downwards, is it still correct to use old standards?” he said in a speech at a Finex forum.

“I really don’t know. I’m not the credit rating guy. But if you want to use the old standards and downgrade us, fine,” he added.

Fitch Ratings maintained its investment grade “BBB” credit rating for the Philippines but revised its outlook to “negative” from “stable” due to the prolonged crisis.

Fitch also said it will continue to monitor the Philippines’ fiscal health.

Mr. Dominguez said he expects the debt-to-gross domestic product (GDP) ratio to peak at 60.8% next year with the government to remain an active borrower in order to fund measures to deal with the pandemic.

In a message to reporters Wednesday, Mr. Dominguez said economic managers expect outstanding debt to hit 59.1% of GDP by year’s end, from 54.6% in 2020.

After the peaking in 2022, the 2023 will decline to 60.7% in 2023 and 59.7% in 2024, he said in a speech delivered to the Finex forum also Wednesday.

“Lower revenue collections and a higher public health bill translate into budget deficits. To cover the budget gap, we had to borrow more. It is a necessity. This is the way the world works. Fortunately, with our high credit ratings, it was not difficult to engage in emergency financing with concessional rates,” he said in his speech.

The economic team in its latest medium-term plan capped the fiscal deficit at 9.3% of GDP in 2021, 7.5% in 2022, 5.9% in 2023 and 4.9% in 2024.

The government’s debt stock was estimated at P11.071 trillion at the end of May. Between the start of the year and May, the debt stock rose 13% following borrowing of an additional P1.276 trillion.

Government spending on the pandemic has hit P660 billion so far, including last year’s expenditures.

He reiterated that the Finance department will only support “reasonable and affordable” additional spending to stimulate the economy further to keep its budget deficit intact.

“Before we end our term, the Duterte administration will make sure that we help the next President and the next generations address fiscal and economic risks,” Mr. Dominguez said. — Beatrice M. Laforga