Fitch upgrades Philippines' sovereign rating as economy grows

Strong and consistent. Fitch Ratings expects the country’s fiscal profile to improve with the tax reform plan. It cited that its capital markets not been as vulnerable to external shocks unlike its Asian peers

Strong and consistent. Fitch Ratings expects the country’s fiscal profile to improve with the tax reform plan. It cited that its capital markets not been as vulnerable to external shocks unlike its Asian peers

Fitch's rating puts the Philippines at par with its credit ratings from other debt watchers Standard and Poor's, and Moody's Investors Services.

MANILA-Fitch Ratings on Monday upgraded the Philippines' sovereign credit rating, citing the nation's strong economic performance and policies and pointing to no immediate impact on investment from President Rodrigo Duterte's deadly war on drugs.

Fitch predicts Philippine real gross domestic product will expand by 6.8% in 2018 and 2019, which would keep it among the fastest growing economies in the Asia-Pacific region.

The sovereign credit rating gives foreign investors perspective into the level of risk associated with investments in a country, including political changes.

The rating agency added investor sentiment has also remained strong, which is evident from solid domestic demand and inflows of foreign direct investment.

The ratings agency lauded the fiscal policies of the government that are geared to boost infrastructure spending and liability management.

The government's tax reform initiative, in particular, will generate revenues for the government to finance its expenditure priorities while also supporting the projected decline of the government debt-to-GDP ratio to around 34 percent, below the "BBB" median of 41 percent of GDP.

Fitch also said that the current account deficit is also expected to be manageable, driven by imports of capital goods, and being offset by remittance inflows and business process outsourcing (BPO) receipts. It opened at 50.42 and rose further to 50.31 from Friday's close of 50.50.

"We are pleased that Fitch is finally convinced that the Philippine economy now is much stronger and more resilient than in 2013, when they granted the Philippines its first investment grade credit rating of BBB-", Dominguez told reporters in a mobile text message.

Under the Duterte administration's infrastructure development agenda, dubbed "Build Build Build", the government programs to spend between 160 billion USA dollars and 170 billion US dollars on infrastructure projects all over the country until 2022.

Fitch also noted motions for tax reform in both houses of Congress, which are now set for bicameral conference.

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