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Philippines – The Japan Credit Rating Agency Ltd. (JCRA) has granted the Philippines an investment grade credit rating following the similar upgrades the country received from Fitch Ratings and Standard & Poor’s.
In a statement on Tuesday, May 7, the JCRA said they are confident that the Philippine economy will sustain an economic growth of around 6% in the medium term on the back of strong domestic demand.
JCRA upgraded the Philippines’ credit rating to BBB from BBB- with a stable outlook.
“It’s fiscal position will continue to improve moderately as the Aquino government is committed to hold the fiscal deficit to GDP (Gross Domestic Product) ratio within its 2% target from 2013 onward through higher taxes on tobacco and alcohol and enhanced tax collection efficiency,” JCRA said.
JCRA said Overseas Filipino Worker’s remittances will continue to be a major driving force for the Philippine economy in 2013. This, coupled by Business Process Outsourcing (BPO) earnings, are expected to also boost the country’s current account surplus.
The credit rating agency said the country’s current account surplus-to-GDP ratio stood at 2.8% as of end 2012. JCRA said the ratio is expected to decline in the medium term but remain in suplus.
“The Philippines has managed to register a current account surplus by offsetting its trade deficit with surpluses in the transfer and services accounts brought mainly by solid gains in OFW remittances and BPO revenues,” it said.