MANILA,
Philippines - The real thanks for the Philippines' historic achievement of
investment grade status should go to the country's army of overseas Filipino
workers (OFWs), a report by FinanceAsia said on October 3.
FinanceAsia
stressed this after Finance Secretary Cesar Purisima welcomed the October 3
announcement of Moody's Service's investment grade rating on the country and
gave credit to the government's "sound fiscal and monetary policies."
Other
government officials, including Bangko Sentral ng Pilipinas governor Amando
Tetangco Jr. and Communications Secretary Ramon Carandang likewise highlighted
the upgrade as "proof that the continuing fiscal reforms ... are further
improving our credibility in the international community."
These
policies by the Aquino government have also been cited by the international
agencies, including Fitch and Standard & Poor's which have made their own upgrades on the Philippine's
rating way back in March and May, respectively.
It's
a sentiment shared by other sovereign
credit watchers as well.
FinanceAsia's
Nick Ferguson, who has previously chimed in on the Philippines' bullish prospects, noted that the
government of President Benigno Aquino III "has certainly been more
prudent than some of his predecessors, such as Joseph Estrada and Ferdinand
Macros."
But
he stressed that the Aquino government "also benefits from a gift that
keeps on giving: remittances from the 15 million overseas Filipino workers, who
have already sent home more than $12 billion so far this year — a 5.8% rise
from the same period last year."
"This
windfall means that remittances are more than enough to service the government's
$125 billion national debt, given ultra-low interest rates, which has allowed
the government to avoid addressing much-needed tax reform," he added.
He
quoted Stephen CuUnjieng, chairman of Evercore in Asia, who described the
upgrade as a "tribute to many generations of hard work by successive
administrations to alleviate the burden left by the Marcos legacy."
CuUnjieng
added that the OFWs are the "real heroes" behind the Philippines'
current account surplus, which was also cited by the credit rating agencies.
The OFWs send home about $24 billion a year. Remittances to the Philippines have stayed resilient despite
the economic crises that hit host countries in the west and the security issues
that hounded Middle East and North Africa.
OFW remittances fuel consumption, a major
contributor to the Philippines' economic growth, which matched China's at 7.5%
in the second quarter. Money sent home to loved ones also push investments in real estate, small businesses, and a key contributor
to the local banking system's financial health.
Currently
awash with cash, local banks have been keen on investing in capital-intensive
infrastructure projects, which are needed to sustain the bullish prospects of
the Philippine economy. - Rappler.com
