Moody's upgrade Philippines credit rating to Investment grade- level with S&P, Fitch, and JICA

The Philippines won a rating upgrade from Moody's Investors Service, completing the nation's ascent to investment rank as President Benigno Aquino leads a growth resurgence that's outpacing the rest of Southeast Asia.

 

The rating on Philippine government debt was raised one level to Baa3, Moody's said in a statement today, citing "robust economic performance," ongoing fiscal and debt consolidation, political stability and improved governance. The outlook on the rating is positive. Stocks and the peso rose.

 

Aquino, who won control of the Philippine Congress in May elections, has pledged to accelerate reforms needed to ensure the nation's economic revival is sustained. His efforts won investment-grade credit scores from Standard & Poor's and Fitch Ratings earlier this year, while the country's expansion of 7.5 percent in the second quarter matched China's pace.

 

"The upgrade was expected; what is a bit surprising here is the positive outlook, making them more bullish than other rating agencies," said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore. "It's a big plus for Aquino, reflecting the success of fiscal reforms and growth sustainability. There's a distinct possibility of another upgrade before he steps down in 2016."

 

The peso climbed to a two-week high, extending gains to 0.6 percent to 43.125 against the dollar as of the noon break in Manila. The Philippine Stock Exchange Index climbed 0.5 percent, reversing an earlier loss.

 

'Most' Influential

 

The $250 billion Philippine economy, which was more than twice the size of Malaysia and 10 times bigger than Singapore's in 1960, was termed "the sick man of Asia" as it lagged behind its peers in following decades. Now, the World Bank forecasts growth will exceed 6 percent every year until 2015.

 

Expansion (PHGDPYOY) held above 7 percent for a fourth quarter in the three months through June, defying a regional slowdown as the nation remained one of Asia's best performers. The Asian Development Bank yesterday raising its growth forecast for the Philippines for this year to 7 percent and to 6.1 percent next year, even as it cut its predictions for developing Asia.

 

Aquino, named by Time magazine as one of the world's 100 most influential people this year, has raised tobacco and liquor taxes to narrow the budget deficit, ousted the top judge for illegally concealing his wealth, and pledged to seek more than $17 billion in infrastructure investments.

 

Withstand Pressure

 

"The Philippines' economic performance has entered a structural shift to higher growth, accompanied by low inflation," Moody's said today. "The new growth path is being reinforced in part by improved fiscal management." The move puts the Philippines on par with Turkey and Spain.

 

Fitch was the first to upgrade the Philippines in March, with S&P following in May. In contrast, Fitch cut Malaysia's credit outlook July 30 to negative from stable, while S&P lowered Indonesia's outlook to stable from positive in May. Moody's today lowered its outlook on Brazil to stable from positive, citing deteriorating debt and investment ratios and evidence the economy is going through a low-growth period.

 

Global bond yields showed investors ignored 56 percent of Moody's and 50 percent of rival S&P's rating and outlook changes last year, more often than not disagreeing when the companies said governments were becoming safer or more risky, data compiled by Bloomberg show.

 

Benchmark Rate

 

Bangko Sentral ng Pilipinas kept the benchmark interest rate at 3.5 percent for a seventh meeting in September after inflation eased to a four-year low in August. The nation will withstand pressure stemming from the impending reduction of the Federal Reserve's stimulus, with growth exceeding 7 percent this year, Governor Amando Tetangco said in an interview yesterday.

 

The World Economic Forum ranks the Philippines 59th in its 2013-2014 Global Competitiveness Index, up from 65 the previous year. Fujifilm Corp., a maker of cameras and medical equipment, and Sonion A/S, which makes high-end microphones and components for audio headsets and hearing aids, are among companies that began production at new factories in the Philippines this year.

 

Aquino plans to boost infrastructure spending to a record next year, and add jobs to reduce poverty levels that are unchanged since before he took office in 2010. The nation's unemployment rate is among the highest in the region.

 

With report from Bloomberg

 

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₱100 million DAP and Ilo-ilo Bogus - Senate Pres. Drilon Faces Plunder Case

A screenshot of Robin Padilla's Instagram post that urges Senate President Franklin Drilon to resign amid the DAP funds controversy.

 

Senate President Franklin Drilon is facing another plunder charge before the Office of the Ombudsman, this time for his involvement in the allegedly anomalous purchase of a 16.2-hectare property in Iloilo seven years ago.

 

Former Iloilo congressman Augusto Syjuco Jr. lodged the latest criminal complaint accusing the senator and his supposed cohorts of pocketing at least ₱60.5 million from the transaction.

 

Last week, Syjuco filed a separate plunder complaint against Drilon for allegedly receiving kickbacks from the 1992 construction of the Iloilo Justice Hall wherein substandard materials and equipment were used to build a structurally weak and dangerous building.

 

In his latest complaint, Syjuco exposed the senator's alleged hand in the purchase of a property in Iloilo City where residents living along the riverbanks would be relocated pursuant to the Iloilo Flood Control Project (IFCP) of the Department of Public Works and Highways (DPWH).

 

He said the property owned by Marilyn Mirasol Inocencio was an unproductive agricultural land valued by the city assessor's office at ₱2,754,030 or just ₱17 per square meter.    

 

However, to boost the valuation of the property, the city assessor's office issued a new tax declaration on Jan. 24, 2006 that changed the classification of the property from agricultural to residential, the day before it was purchased.

 

"These manipulations of the market value for the subject property abruptly increased artificially its selling price to ₱81,001,000 while the assessed value also sky-rocketed to ₱6,075,080.

 

"In a worse and surprising turn of events, the subject property that was valued at ₱2,754,030 only a day ago, was renegotiated for a stupendously increased amount of ₱63,200,000 on Jan. 25, 2006 through a Deed of Sale signed and executed a day after its market and assessed value were arbitrarily increased," Syjuco bared.

 

"Apparently, the issuance of the new tax declaration was made to justify the overpricing, to the damage and prejudice of the government," his complaint read.

 

Syjuco said Drilon immediately released the amount to pay the landowner a staggering ₱63.2 million from his Priority Development Assistance Fund (PDAF.)

 

Drilon slammed the latest plunder case filed against him by Syjuco as a desperate and pathetic attempt to malign him by a discredited politician.

 

Just like the previous plunder charge against him by Syjuco, Drilon said that the latest case was baseless since it had nothing to do with him at all.

 

"I had nothing to do with the purchase of the land as mentioned in the complaint of Syjuco. It was the Iloilo City government which purchased that land. I had no participation whatsoever in the purchase of that land," Drilon said in a statement. – With Marvin Sy.

 

₱100 million DAP

Answering accusations that he was among those who received the lion's share of "additional pork barrel," Senate President Franklin Drilon on Sunday said he received ₱100 million from the Disbursement Acceleration Plan (DAP) but put it to good use.

 

"The ₱100 million, I received that…I requested for that fund under the DAP of the government so [Iloilo] would have additional infrastructure for tourism to boost our opportunity to host the 2015 [annual meeting of the Asia-Pacific Economic Cooperation]," he said in a radio interview.

 

The Senate President explained that the DAP, a lump-sum budgetary item introduced in 2011, was created because the government was being criticized for underspending.

 

"This is from the DAP which was created because of criticisms by economists that the government was underspending. Spending was weak that is why the [gross domestic product] at that time was low, at 3.6 percent against our target of 6 to 7 percent," he said.

 

Drilon, who hails from Iloilo City, said the fund after it was granted to his office went straight to the Department of Public Works and Highways (DPWH) for implementation.

 

"Senator Jinggoy [Estrada] himself said that it was not a bribe. If it was used to influence [the impeachment trial of former Chief Justice Renato Corona last year], there is no logic to releasing it after the trial and conviction of Corona," he said.

 

Estrada, in a privilege speech last Wednesday, claimed that senators who voted to convict Corona were given an additional P50 million in funds "as provided in a private and confidential letter memorandum of the then chair of the Senate committee on finance [now Senate President Drilon]."

 

But Drilon pointed out that Senator Joker Arroyo, who voted for the acquittal of Corona, received funds from the DAP. However, Budget Secretary Florencio Abad said Arroyo's funds were released in 2013.

 

"Confidential man o hindi, ang importante ay kung paano ginamit," he said of the so-called confidential memorandum.

 

Drilon asked the public to listen to their side of the story.

 

"The release of funds does not necessarily mean that it was pocketed [by the official]," he said.

 

The Senate president said that to address such perceptions, he will push for the abolition of the Priority Development Assistance Fund (PDAF).

 

"We will lead the reform agenda so there would be no doubts that if [a lawmaker] has PDAF, something questionable is happening," he said.

With report from philSTAR and Inquirer 

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