The comments came after worldwide rating agency Standard and Poor’s warned that extrajudicial killings are threatening the Philippine economy and endangering its democratic institutions.
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An investment grade country is widely considered one capable of repaying its debts.
In a statement on Wednesday, S&P cited the country for its ample supply of foreign exchange and its low levels of foreign debt.
Dominguez III described S&P’s decision to maintain the credit rating and stable outlook as favorable news, but argued against the opinion that predictability of policymaking in the Philippines has “somewhat diminished”.
“However, global investors may be getting anxious about potential diplomatic complications and short-term law and order issues on the ground”, S&P said, adding that “the peso has been one of the region’s weakest performers since June”.
Philippines President Rodrigo Duterte attends the ASEAN Summit in Vientiane.
“We believe this could undermine respect for the rule of law and human rights, through the direct challenges it presents to the legitimacy of the judiciary, media, and other democratic institutions”, it said.
Despite the rising institutional risks it flagged, the credit rating agency said it believes that the country’s external payments position, backed by rising foreign exchange reserves among others, will remain strong.
The acid-tongued Duterte had earlier used vulgar language to dismiss criticism from the two organisations and the United States of his bloody war on crime, which has claimed over 3,000 lives since he took office on June 30.
Protesters stage a “die-in” protest in August to dramatize the rising number of extrajudicial killings in Duterte’s drug war. This should bring down government debt to just 18% of GDP by 2019, down from its peak of 28% in 2010, it said.
S&P also expects the Philippines to remain in a net external creditor position, demonstrated by the country’s net external debt averaging about -16 percent over 2016-2019 with a negative number indicating a net external lending status. Much of the foreign currency will come from overseas remittances, call center receipts, and earnings from the tourism and maritime industries.
Finance Secretary Sonny Dominguez, though, lamented S&P’s warnings.
“The Philippines’ ability to keep its credit rating well within the investment grade scale, which has transcended change in political leadership, is a testament that the country’s economic gains have been built from deeply rooted structural and sound policy reforms over the years”, Tetangco said.
“But. after they question me, I will question them, one by one in open forum. then you will all see how I will beat those devils”. But S&P noted that a credit upgrade is unlikely in the next two years unless fiscal reforms lift investment and growth prospects, and policy pronouncements become clearer.
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“Through continued conduct of sound monetary policy and prudent bank supervision, as well as efficient management of the country’s external accounts, the BSP will help make sure these economic gains are further enhanced moving forward”, he added.
