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October 06, 2022

Diokno rules out downgrades from the major sovereign credit watchers

Bangko Sentral ng Pilipinas governor Benjamin E. Diokno brushed aside notions of possible changes in the country’s credit standing with the major sovereign credit watchers and ruled this out on Sunday.

In a Viber message, Diokno said that changes in fiscal and monetary numbers in recent months in tandem with geopolitical tremors happening in the same timeframe were not likely to change the mind of the credit watchdogs about the strength of the Philippines as a player in the debt market.

He has argued that the Philippines is not a typical country whose public sector debt and budgetary shortfall as percent of local output or the gross domestic product (GDP) have become problematic as consequence of the ongoing pandemic.

He reiterated the country’s ability to weather contingent events given its debt-to- GDP and deficit-to-GDP numbers at present are sufficient to convince the likes of Standard and Poor’s, MOody’s Investors Service as well as Fitch Ratings to downgrade the country’s credit standing.

All three sovereign credit watchers have rated the country’s foreign IOUs one notch higher than the minimum considered safe by the global fund managers and therefore labelled investment grade.

“The above facts are strong arguments why the likelihood that the Philippines’ ratings will be downgraded by rating agencies are nil. Last month, Fitch affirmed the country’s investment grade BBB rating, amid a wave of downgrades of many emerging economies. The other major ratings agencies – S&P and Moody’s – agree,” Ddiokno said.

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