“We really want an upgrade to A,” says Benjamin Diokno, governor of the BSP.
Few countries in the world have time to focus on upgrades right now as they are all much more likely to be facing pressure in the other direction.
Clearly, Covid-19 means the Philippines isn’t going to hit A anytime soon. But it’s not as far-fetched as you might think. The Philippines has weathered the crisis well, showing remarkable economic resilience.
“We entered into this pandemic from a position of strength, having instituted reforms during the last two decades in response to the Asian financial crisis,” Diokno says. “In the past when we had a crisis, we had to service our debt, interest rates would go up and the peso would be threatened. But now, the peso is one of the only currencies that has appreciated relative to its peers.”
The country’s gross international reserves reached an all-time high of $93.3 billion at the end of June, exceeding external debt, which was $81.4 billion at the end of March. The debt-to-GDP ratio, which routinely used to be about 70%, fell to 39.6% at the start of the year, and this has kept the peso strong.
None of that strength is specifically Diokno’s doing, nor does he claim it; he only joined the central bank in March 2019 and inherited a well-run and respected institution. But the response to Covid-19 has been very much down to him.
“This pandemic is like no other,” Diokno says. “It’s unprecedented. Once in a lifetime.”
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