Will Fitch downgrade the Philippines?
A lot of factors contribute to a country’s credit rating, which is given by credit rating agencies such as Fitch Ratings. It appears that a positive or negative outlook may not necessarily lead to an upgrade or downgrade.
By Anna Cudia
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Over a year into the pandemic, in July 2021, Fitch Ratings revised its outlook for the Philippines from stable to negative, citing heightened economic, fiscal, and political risks.
With regard to economic risks, Fitch mentioned the setback faced by the country in terms of its slow recovery given the highly transmissible COVID-19 variants as well as the stringent mobility restrictions.
As for fiscal risks, it highlighted the pandemic-induced weaker fiscal finances, both in absolute terms and against peers, as well as the 2018 Supreme Court ruling requiring higher revenue transfers from the central to local governments.
Political risks also influenced its view, pointing out uncertainties about the 2022 presidential elections as well as other factors such as political stability, rule of law, human rights, political freedom, etc.
Outlook still negative
A lot has changed since Fitch released that negative outlook – mobility is back and has even outpaced pre-pandemic levels, government revenues started to recover, and the 2022 presidential elections proved to be peaceful.
However, in October 2022, Fitch kept the Philippinesâ