New York Fitch Ratings downgrades Philippines outlook to Negative

New York-based Fitch Ratings has lowered its outlook for the Philippines to negative from stable as it expects a slower recovery for the country from the pandemic-induced recession with a gross domestic product (GDP) growth of five percent instead of 6.3 percent this year.

Fitch Ratings New York Office

A negative outlook means the debt watcher could downgrade the Philippines’ credit rating in the next 12 to 18 months if the country fails to recover from the pandemic.

This is the second revision given by Fitch after it lowered the country’s outlook to stable from positive in May last year, at the height of the strict lockdown measures  imposed by the government to slow the spread of COVID-19 cases.

It is likely the opposition will use this news about this issue of the Philippines’ “downgraded” credit rating again, to their advantage.

There is, however, no basis for worry. The debt-to-GDP (gross domestic product) ratio is still manageable. The budget deficit increased but the gross international reserves of the Bangko Sentral ng Pilipinas (BSP) are at a historic high.

Counld the Pandemic paralyze the economy again. 

The rate of vaccination is supply-driven though there are bottlenecks in the logistics chain which need to be addressed and local government units (LGUs) must improve on implementation.

We are the only country in the region not experiencing a Delta variant driven surge. This can change the minute there is a community transmission.

The Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID or IATF) has not addressed the need for a unified contact-tracing system. Both private and government offices are still lax in their enforcement.

There is no wide use of QR code scanners. The health declaration is still filled out manually. The security guards were lax in temperature checks. The IATF-EID and the LGUs are falling into a false sense of complacency with talk about allowing children above 5 years old to go out to select establishments. With our vaccination rate, this is not advisable. It is better to be safe than sorry.

The Delta variant has proven that the vaccinated can still be infected but the risk of mortality is manageable. The economic recovery will be derailed by a new surge fueled by the Delta variant. The IATF-EID should be formulating policy on the basis that COVID-19 is endemic as what Singapore is doing.

It should speed up vaccination as best as it can despite the supply constraints and make a bold push for adapting to the new normal under the assumption that COVID-19 is endemic.

Both government and the private sector should push for digitization to minimize risk and prevent another surge resulting in a lockdown which will paralyze the economy again.