Metro Manila (CNN Philippines, July 10) — The Philippines is aiming for a solid A investment grade rating for its debt score before the end of President Ferdinand Marcos Jr.’s term, his finance secretary said.
The goal comes as the country embarks on a fiscal consolidation path that will see its debt trimmed to just 51% of the economy from over 60% now – one of the key debt metrics used to gauge a country’s creditworthiness.The government has been in talks with the three major global ratings agencies – Standard & Poor’s, Fitch Ratings, and Moody’s – with a meeting held recently.“We plan to reduce that [debt-to-GDP ratio] to 51% and that’s a combination of lower borrowing and also higher GDP (gross domestic product),” Finance Secretary Ben Diokno told reporters.The Congress-approved bill creating the Philippines’ first sovereign wealth fund could help lower borrowings, he added. The measure has been sent to the palace for the president’s signature.“Of course baka makatulong ang Maharlika. ‘Yung mga big projects will be funded. For example, that long bridge from Cavite to Bataan. Hindi na namin ilalagay sa budget ‘yun (We will no longer include that in the budget). We do not have to borrow money for that,” Diokno explained.The Maharlika wealth fund is initially funded by seed money from government-run financial institutions, so the UP School of Economics earlier flagged that the financial returns from that sovereign wealth fund must reap at least 10% to compensate for foregone opportunities that are a result of diverting public funds supposed to go to social welfare spending.Diokno said funds will be invested only in infrastructure projects that are forecast to deliver at least a 10% yield – the benchmark set by the National Economic and Development Authority.Writing the implementing rules for the proposed Maharlika wealth fund law is almost done, Diokno said.“The law says we have 90 days to prepare the IRR [implementing rules and regulations]… we will not use the 90 days,” Diokno said.Writers of the Maharlika fund law’s implementing rules would need consultation with the financial institutions that will contribute to the fund.Meanwhile, the economic team begins this week with another roadshow that takes them to Canada.
