MANILA – The central bank vowed to continue reforms in the financial system to achieve an investment grade rating for the Philippines after Moody’s upgraded the country’s credit rating to a notch below investment grade yesterday, a government press release said.

We will just continue to maintain macro stability and continue our reforms in the financial system to make sure it remains sound and stable, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said.

He said an investment grade rating for the country is “possible” in the short term.

Moody’s Investor’s Service revised upwards to “Ba1” from “Ba2” with ‘stable’ outlook the country’s credit rating on account of continued improvement in economic and fiscal performance amid negative global economic developments, better medium term economic prospects, and stable financial system.

The upgrade brought the country’s credit grade level among the three major debt watchers, including Fitch Ratings and Standard & Poor’s, at the same level.

Tetangco said the structural reforms undertaken with the private sector enabled the country to have a strong banking system “and have transformed our banks into effective financial intermediaries.”

He said the total of 100 basis points in the central bank’s policy rates this year will “help the economy withstand ongoing global economic strains and to support economic growth.”

To date, the BSP’s overnight borrowing or reverse repurchase rate is at record-low of 3.5 percent and the overnight lending or repurchase rate is at 5.5 percent.

These were slashed with 25 basis points each in January, March, July and October.

Tetangco said monetary official’s “prudent approach to external financial management has yielded a more manageable and sustainable external debt position.”

Relatively, Finance Secretary Cesar Purisima said the upgrade in the country’s credit rating is a recognition of the “significant progress that the Aquino administration has undertaken to improve the country's economic fundamentals.”

Moody’s, in a statement, said that the Philippines has demonstrated considerable economic strength and fiscal resilience despite the headwinds from softening external demand.

The country, in contrast to similarly rated countries, is poised to record a combination of faster growth, lower inflation, exchange rate appreciation and an increase in foreign exchange reserves, while maintaining trend debt consolidation, it said.

The ratings agency cited that cyclical features support improved prospects for growth in the medium-term.

It also noted the resiliency of remittances from overseas Filipinos as well as the economic impact of the landmark peace pact between the government and the Moro Islamic Liberation Front, the press release said.*

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