Why the S and P ratings hike is a good thing

The Standard and Poor upgrade of our countrys soverign credit rating to BBB+ excites many within the financial sector, and for reasons we can all understand.

The S&P statement itseld puts its reasons front and center: “The Philippines has above-average economic growth, a healthy external position, and sustainable public finance.” The stable outlook on the rating, “reflects our view that the Philippine economy will maintain its momentum over the medium term, in combination with contained fiscal deficits and stable public indebtedness.”

This indicates not only a robust economy with medium term projections of growth, but a strong capacity to pay loans, which is what the credit ratings are about to begin with.

Moreover, the fact that we have attained the highest credit rating so far puts us on the map of the international finance community that looks to asia as a growth engine. We have surpassed Indonesias ratings and are at par with Thailand. Increased foreign direct investment is going to be a given since more investors will see less risk in lending money for ventures in the Philippines.

For many, the deeper significance of the upgrade is that it slaps the face of negativity that was being projected to destroy the country`s image in front of investors. It did not seem to work.

Moreover, it is a vote of confidence not only on the economic team of President Duterte, but on his foreign policy that has strengthened trade and bilateral relations with its neighbors. Little wonder why our foreign direct investments in 2017 and 2018 have reached a total of 20 Billion dollars? The upgrade will boost that even more.