AMONG the most noted accomplishments of the previous Aquino administration were the high ratings it received from the three international credit rating agencies – Fitch Ratings, Moody’s Investor Service, and S&P Global Ratings. The Philippines was lauded as among the leading economies in our part of the world, second only to China. Because of the ratings, the country paid lower interest on its foreign loans. It also attracted foreign investments, although very much below the level of our neighbors in Southeast Asia.
Last week, the Philippines’ economic team – Socio-economic Planning Secretary Ernesto Pernia, Finance Secretary Carlos Dominguez III, Banko Sentral ng Pilipinas Governor Amando Tetangco Jr., and Budget Secretary Benjamin Diokno – met with officials of the three credit rating agencies, as well as with some US investors and leaders of financial institutions in Washington, DC.
In recent weeks, S&P had expressed concern – along with the United Nations, the European Union, and the United States – over President Duterte’s anti-drugs campaign with its thousands of deaths, arrests, and surrenders. S&P said the Philippines is unlikely to have a credit rating upgrade in the next two years due to the President’s unpredictability and uncertainty over his domestic and foreign policies. It said it might even downgrade the country’s status if the government fails to sustain its fiscal and economic gains.
The Philippine economic team sought to counter this perception by saying that the country’s macro-economic fundamentals remain robust and the previous Aquino administration’s economic policy has been kept intact.
But the world should know, the team said, that getting a credit upgrade is only secondary to the new administration’s priority concern, which is to reduce the incidence of poverty in the country from 26 percent of the population to 17 percent in the next six years. Thus, Finance Secretary Dominguez said, while the country aims to sustain national economic growth to 7 percent or more, “we intend to make to economic growth more inclusive.” There will be much greater infrastructure spending to correct uneven economic progress. There will be a major push for greater agricultural production. The ultimate goal is to spread the economic gains to the people.
The previous Aquino administration was widely cited for its high credit ratings, attesting to the success of its economic policies. But it was criticized for failing to make the growth inclusive. At the start of the last presidential election, President Aquino declared it would be a referendum on his record and his accomplishments, undoubtedly thinking of the high Gross Domestic Product (GDP) growth and high credit ratings. But the masses, largely untouched by the high national growth, voted for change in the person of Mindanao candidate Rodrigo Duterte.
He is now carrying out that policy of change in the anti-drugs campaign. Soon, the nation hopes, they will see that policy of change towards poverty reduction – as spelled out by our economic team in Washington, DC – at work in their everyday lives.