S&P affirms Philippines ratings, outlook stable

Standard & Poor's Ratings Services on April 21, 2016, affirmed Philippines 'BBB' long-term and 'A-2' short-term sovereign credit ratings. S&P also affirmed 'axA/axA-2' ASEAN regional scale rating on the Philippines.

The agency noted that Philippines' strong external position, which features rising foreign exchange reserves and low and declining external debt support their assessment. However, it added that these strengths are offset by the Philippines' low income and a developing institutional and governance framework that can hamper policy responsiveness.

It said that new administration in the country after the May 2016 elections having a strong mandate and the government's fiscal and economic development plans also provide useful policy anchors while keeping the inflationary environment favorable. S&P forecasts fiscal deficits to average 1% over 2016-2019 and government debt burden to continue to decline from its peak of 28% of GDP in 2010.

S&P said that the ratings may be lowered if, under the new administration, the reform agenda stalls or if there is a reversal of the recent gains in the Philippines' fiscal or external positions.