S&P Raises Philippines’ Credit Rating “BB+” to 9-Year High

July 5, 2012: The Philippines' debt rating was raised to the highest level since 2003 by Standard & Poor's, taking President Benigno Aquino nearer his goal of attaining investment grade.

The nation's long-term foreign currency-denominated debt was raised one level to BB+ from BB, S&P said in a statement Wednesday (July 4, 2012). That's one step below investment grade and on a par with neighboring Indonesia. The outlook on the rating is stable.

"The foreign currency rating upgrade reflects our assessment of gradually easing fiscal vulnerability," Agost Benard, a Singapore-based analyst at Standard & Poor's, said in the statement. "The rating action also reflects the country's strengthening external position, with remittances and an expanding service export sector continuing to drive current- account surpluses."

Emerging nations from Brazil to Indonesia have won credit- rating upgrades in the past year as governments contained budget deficits. A higher assessment for the Philippines will help Aquino as he moves to boost spending to a record this year and seeks $16 billion of investment in roads, bridges and airports to shield the economy from Europe's sovereign-debt crisis.

The Philippine peso (₱) is up 4.8 percent against the dollar in 2012, the best performer in a basket of 11 major Asian currencies tracked by Bloomberg. The Philippine Stock Exchange Index climbed to a record this week. The benchmark seven-year bond yield fell to the lowest in at least two months yesterday.

'Very Positive'

S&P's recognition for the Philippines' strong external position, growth prospects and improving fiscal sector adds fundamental support to the market, Bangko Sentral ng Pilipinas Governor Amando Tetangco said yesterday after the ratings action.

Moody's Investors Service boosted its outlook on the Philippines to positive in May 2012, citing improving debt levels. Fitch Ratings raised the country's debt to one step below investment grade in June 2011.

S&P's move is "very positive because it promotes the country's macroeconomic and fiscal context," said Fitz Aclan, who helps manage ₱850 billion pesos ($20.4 billion) at Manila- based BDO Unibank Inc. "There could be some upward movement for our sovereign bonds, even our local bonds. This will also be positive for equities."

Aquino plans to narrow the budget shortfall to 2 percent of gross domestic product by 2013 from a target of 2.6 percent this year. The government has stepped up efforts to catch tax evaders and smugglers, and has drawn up bills aimed at increasing revenue to narrow the fiscal deficit.

"We expect further rating improvements will likely be driven by either our appraisal of improving political and institutional factors or by evidence of a sustainable structural revenue improvement," S&P said. "Conversely, we may lower the ratings if the government's commitment to fiscal consolidation weakens, resulting in rising debt, or if the external liquidity position deteriorates significantly."

The $200 billion economy grew 6.4 percent in the first quarter, the fastest pace since 2010. Aquino is aiming for an expansion of as much as 8 percent annually to cut poverty.

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New list of countries where OFW are allowed to work + 32 OFW Friendly Countries added

The new list of countries that comply with Philippine government standards that protect overseas Filipino workers (OFW) does not include six top OFW destinations.

In May 2011, the POEA's Governing Board (GB) Resolution No. 2 listing 76 countries those were OFW-friendly.

Resolution No. 2 said, "In the meantime, the deployment of OFWs to these countries [not included in the list] shall continue except where deployment ban is in effect."

OFW-friendly countries

According to Section 3 of RA 10022, "the State shall allow the deployment of overseas Filipino workers only in countries where the rights of Filipino migrant workers are protected."

The section provides that the Philippines will allow deployment if the host country:

has existing labor and social laws protecting the rights of workers;

is a signatory to and/or a ratifier of multilateral conventions, declarations or resolutions relating to the protection of workers; and

has conducted a bilateral agreement or arrangement with the government on the protection of the rights of OFWs.

The POEA will publish the resolutions in two newspapers of general circulation and will take effect 15 days after publication.

Baldoz said the Philippine government can consider as 'compliant' countries taking positive, concrete measures to protect the rights of migrant workers based on the provisions of RA 10022.

She clarified that non-compliant countries may push for bilateral agreements with the Philippines to address the "non-compliances."

She also said Filipino workers can still be deployed to companies with international operations in non-compliant "unless there is an existing ban to that country.

The Philippine government has an existing deployment ban to conflict affected countries such as:

1. Lebanon
2. Nigeria
3. Somalia
4. Syria
5. Iraq (Partial ban)
6. Afghanistan (partial ban)

As of July 03, 2012, Philippine labor officials have added 32 countries - including conflict-hit Syria - to the list of territories that meet Philippine standards on the protection of overseas Filipino workers (OFWs).

According to the Department of Labor and Employment (DOLE), the Philippine Overseas Employment Administration (POEA) Governing Board approved a resolution adding the 32 countries to the list.

 "Under this qualification, the POEA may continue to deploy OFWs to these countries and the Department of Foreign Affairs will continue to negotiate for the better protection of household service workers even beyond 12 April 2012," Labor Secretary and POEA Governing Board chairperson Rosalinda Baldoz said in a news release.

Those who signed the resolution were Baldoz, POEA Administrator Hans Leo Cacdac as governing board vice chairman, and Leonardo de Ocampo, governing board member.

Baldoz listed the new 32 OFW countries as:

1. Algeria
2. Bahrain
3. Bangladesh
4. Bhutan
5. Botswana
6. China
7. Dominican Republic
8. East Timor/Timor Leste
9. Iran
10. Saudi Arabia
11. Kiribati
12. Kuwait
13. Kyrgyz Republic/Kyrgyzstan
14. Lesotho
15. Maldives
16. Micronesia
17. Mongolia
18. Montenegro
19. Mozambique
20. Panama
21. Papua New Guinea
22. Qatar
23. Serbia
24. Solomon Islands
25. Sri Lanka
26. Syria (partial ban lifted)
27. Swaziland
28. Tajikistan
29. Turkmenistan
30. United Arab Emirates
31. Yemen, and
32. Zambia.

Baldoz said these countries have been certified by the DFA last May 24, 2012 after a recommendation was made by the Congressional Committee on Overseas Welfare Affairs chaired by Rep. Walden Bello.

Based on the recommendation, the countries were found "to be compliant without prejudice to negotiations for the protection of household service workers."

 "The 32 countries bring to 184 the total number of countries already certified by the DFA out of 203 countries. Only 19 countries now remain to be non-certified," the DOLE said.

 So far, the countries still not certified as OFW-friendly are:

1. Afghanistan
2. Chad
3. Cuba
4. Democratic People's Republic of Korea/North Korea,
5. Eritrea
6. Haiti
7. Iraq
8. Lebanon
9. Libya
10. Mali
11. Mauritania
12. Nepal
13. Niger
14. Palestine
15. Somalia
16. Uzbekistan
17. Zimbabwe
18. Monaco,
19. Vatican (Holy See)

Out of these 19 countries, the Board has yet to receive the certifications for the Vatican and Monaco, Baldoz explained.

The certifications for Libya and Iraq are currently being reviewed amid latest developments that may lead to the amendment of their respective certifications.

 "The POEA Governing Board notes that the DFA has yet to complete the review of its previous certifications issued for Iraq and Libya," Baldoz said.

Complete list of Countries where Overseas Filipino Workers (OFW) are allowed to work (As of July 03, 2012)

1. Albania
2. Algeria
3. Andorra
4. Angola
5. Antigua and Barbuda
6. Argentina
7. Armenia
8. Australia
9. Austria
10. Azerbaijan
11. Bahamas
12. Bahrain
13. Bangladesh
14. Barbados
15. Belarus
16. Belgium
17. Belize
18. Benin
19. Bhutan
20. Bolivia
21. Bosnia and Herzegovina
22. Botswana
23. Brazil
24. Brunei
25. Bulgaria
26. Burkina Faso
27. Burma
28. Burundi
29. Cambodia
30. Cameroon
31. Canada
32. Cape Verde
33. Central African Republic
34. Chile
35. China
36. Colombia
37. Comoros
38. Congo, Democratic Republic of the
39. Congo, Republic of the
40. Costa Rica
41. Cote d'Ivoire
42. Croatia
43. Cyprus
44. Czech Republic
45. Denmark
46. Djibouti
47. Dominica
48. Dominican Republic
49. East Timor (Timor-Leste)
50. Ecuador
51. Egypt
52. El Salvador
53. Equatorial Guinea
54. Estonia
55. Ethiopia
56. Fiji
57. Finland
58. France
59. Gabon
60. Gambia, The
61. Georgia
62. Germany
63. Ghana
64. Greece
65. Grenada
66. Guatemala
67. Guinea
68. Guinea-Bissau
69. Guyana
70. Honduras
71. Hong Kong
72. Hungary
73. Iceland
74. India
75. Indonesia
76. Iran
77. Ireland
78. Israel
79. Italy
80. Jamaica
81. Japan
82. Jordan
83. Kazakhstan
84. Kenya
85. Kiribati
86. Kosovo
87. Kuwait
88. Kyrgyzstan
89. Laos
90. Latvia
91. Lesotho
92. Liberia
93. Liechtenstein
94. Lithuania
95. Luxembourg
96. Macau
97. Macedonia
98. Madagascar
99. Malawi
100. Malaysia
101. Maldives
102. Malta
103. Marshall Islands
104. Mauritius
105. Mexico (United States of Mexico)
106. Micronesia
107. Moldova
108. Mongolia
109. Montenegro
110. Morocco
111. Mozambique
112. Namibia
113. Nauru
114. Netherlands
115. Netherlands Antilles
116. New Zealand
117. Nicaragua
118. Nigeria (partial ban lifted)
119. Norway
120. Oman
121. Pakistan
122. Palau
123. Panama
124. Papua New Guinea
125. Paraguay
126. Peru
127. Philippines
128. Poland
129. Portugal
130. Qatar
131. Romania
132. Russia
133. Rwanda
134. Saint Kitts and Nevis
135. Saint Lucia
136. Saint Vincent and the Grenadines
137. Samoa
138. San Marino
139. Sao Tome and Principe
140. Saudi Arabia
141. Senegal
142. Serbia
143. Seychelles
144. Sierra Leone
145. Singapore
146. Slovakia
147. Slovenia
148. Solomon Islands
149. South Africa
150. South Korea (Republic of Korea)
151. South Sudan
152. Spain
153. Sri Lanka
154. Sudan
155. Suriname
156. Swaziland
157. Sweden
158. Switzerland
159. Syria
160. Taiwan
161. Tajikistan
162. Tanzania
163. Thailand
164. Timor-Leste
165. Togo
166. Tonga
167. Trinidad and Tobago
168. Tunisia
169. Turkey
170. Turkmenistan
171. Tuvalu
172. Uganda
173. Ukraine
174. United Arab Emirates
175. United Kingdom
176. United States of America (USA)
177. Uruguay
178. Vanuatu
179. Venezuela
180. Vietnam
181. Yemen
182. Zambia

In order for the listed 19 listed countries to be open for OFW, those countries must have to comply the standard required by the Philippines government.

East Asian countries like Japan and South Korea who have a construction business in the  listed ban countries for OFW are not allowed to hire any Filipinos professionals and skilled workers.

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