Moody's affirms Philippines' investment grade BAA2 credit rating | ABS-CBN

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Moody's affirms Philippines' investment grade BAA2 credit rating

Moody's affirms Philippines' investment grade BAA2 credit rating

Benise Balaoing,

ABS-CBN News

 | 

Updated Aug 23, 2024 03:39 PM PHT

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MANILA (UPDATE) - Moody's Investor Service has affirmed the Philippines' investment grade BAA2 rating with a stable outlook.

The debt watcher said it kept its credit rating for the Philippines because of the country's reforms to liberalize the economy, fiscal consolidation efforts, and robust macroeconomic fundamentals. The credit rating firm gave the Philippines the same grade in September 2022.

An investment grade rating indicates lower credit risks, which allows a country like the Philippines to access capital or debt at lower interest rates or lower costs to the public. 

“The passage of reforms over the past several years to liberalize the Philippine economy will support medium-term growth potential by supporting a business-friendly environment and attracting foreign investments," Moody's said. 

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The rating also takes into account that fiscal consolidation will resume with the debt burden to remain higher than pre-pandemic levels but comparable to similarly rated peers over the medium term, Moody’s said. 

Moody’s said household consumption in the Philippines will bounce back in the second half of 2024 as the impact of El Nino fades. It also said that the tariff cut on rice to 15 percent from 35 percent will help ease food prices.

It also said that recovery in electronics exports, growth in business process outsourcing (BPO) revenues, and improving international tourism will also help boost economic growth.

Moody’s also said it thinks the government’s debt burden will stabilize at around 60 percent of GDP on a national government basis, and around 50 percent on a general government basis in the medium term. The debt watcher also said it expects foreign direct investments into the country to keep increasing till 2025. 

But growth may be hindered by poverty levels and uneven access to education and training opportunities on upskilling of the labor force, Moody’s noted. It also flagged the failure to pass the proposed fiscal reform bills or higher government spending ahead of the 2025 mid-term elections as downside risks to fiscal consolidation. Moody’s also noted that geopolitical tensions may hurt trade and tourism, but doesn’t expect these to worsen.

Bangko Sentral Governor Eli Remolona welcomed Moody's rating. 

"We are taking a measured approach in safeguarding price stability conducive to sustainable economic growth," he said. 

Finance Secretary Ralph Recto, meanwhile, hailed the credit rating as "another victory for Filipinos." 

"These will create more quality jobs, increase incomes, and reduce poverty incidence in the country," he said. 

The Philippines has received two "A" credit ratings from Japan-based agencies: one from Rating and Investment Information, Inc. (R&I), and another from the Japan Credit Rating Agency, Ltd. 

In June, Fitch Ratings affirmed the Philippines’ 'BBB' investment-grade credit rating and kept its stable outlook.  A 'BBB' rating means a low risk of default and adequate capacity to pay, although some unfavorable economic conditions could constrain this capacity. A "stable" outlook, meanwhile, suggests a low likelihood of a rating change over the next one to two years.

S&P Global Ratings, meanwhile, affirmed the Philippines’ BBB+ investment grade credit rating in November 2023.

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TNVS drivers call on LTFRB anew to enforce rule on mandatory discounts

TNVS drivers call on LTFRB anew to enforce rule on mandatory discounts

Andrea Taguines,

ABS-CBN News

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Grab signs in a mall in Pasig City. Mark Demayo, ABS-CBN News/FileGrab signs in a mall in Pasig City. Mark Demayo, ABS-CBN News/File

MANILA — A group of Transport Network Vehicle Service (TNVS) drivers appealed to regulators anew on Wednesday to make ride-hailing firms shoulder the full cost of the mandatory 20-percent discount for senior citizens, Persons with Disabilities (PWD), and students.

“Ang mga driver/operator po, maliit lang ang kinikita nyan. Bakit kailangan pang ipapasan ang mga discount na ito?” said Laban TNVS President Jun De Leon during a rally outside the Land Transportation Franchising and Regulatory Board (LTFRB) office in Quezon City.

“Non-negotiable na po sa atin ang mandatory discounts. Dapat po, 100 percent, sagutin ito ng Transport Network Company (TNC),” he added.

LTFRB Chairman Teofilo Guadiz earlier said that based on Memorandum Circular 2015-016-A, TNCs should absorb these passenger discounts as part of the conditions of acquiring a franchise.

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But some TNCs continue to pass it on to their partner drivers, or at least split the cost with them in the case of dominant player Grab Philippines— on the basis of a different LTFRB memo issued in 2018 which states that public utility operators and drivers should grant the discount.

In a previous interview with ABS-CBN News in December, Guadiz said that provision only applies to public utility jeepneys and buses.

In an effort to clear up the confusion, he said the LTFRB would issue a new order that would also lay down standards on how these discounts should be applied so as not to inconvenience passengers from vulnerable groups.

Up to now, though, the LTFRB has yet to issue any order.

“The issue boils down to sino ang magkukuha or aako nung discount na yan, is it the TNC like Grab? Or is it the operator, yung may-ari ng sasakyan, or is it the driver?” said Guadiz during his latest press conference on Tuesday.

Laban TNVS expressed frustration over this, saying the LTFRB is seemingly changing its initial stance.

“Hindi ko alam kung bakit biglang nagbago ang ihip ng hangin sa sinasabi ni Chairman Guadiz… Ang sinasabi po nila ay pag-aaralan nila ito. Ano pa ba ang dapat pag-aralan? Maliwanag po sa Memorandum Circular, hindi na po dapat palitan,” insisted De Leon.

New entrants in the four-wheeled ride-hailing market, Lalamove and Pure Ride, are also waiting for an LTFRB memo so they can ensure proper compliance.

Lalamove, which launched Lalamove Ride in early February, told ABS-CBN News that, at least for now, it is shouldering majority of the passenger discount while implementing a lower commission rate for drivers.

“In the absence of a memorandum circular, minabuti na po naming magtake ng initiative na majority share si Lalamove, 60% ng discounts are shouldered by Lalamove and then 40% are shouldered by the drivers,” said Lalamove Philippines Managing Director Djon Nacario.

“But please take note, 2% commission lang yung ino-offer namin… At the end of the day, 98% nung fare yung maiuuwi ng ating partner drivers,” he added, saying the firm has one of, if not, the lowest commission rate in the industry.

Nacario also said that should the LTFRB order them to absorb the full cost of the discount, Lalamove would also be prepared to comply.

Meanwhile, Pure Ride, which began operations last February 14, is proposing a 50-50 share with drivers once its 10 percent commission rate takes effect.

“Kunyari sa start we got 0 commission. Ibig sabihin, wala naman kaming nakuha, so the entire 20% would be on the driver which is fair enough. Now when we start getting 10%, dapat 10% lang din yung magiging cover namin (sa discount),” said Pure Ride Chief Operating Officer Edison Go Tan during the firm’s pre-launch media briefing in Makati last February 11.

“Pero siyempre kung sasabihin ng LTFRB talagang icha-charge nila sa TNC, wala kaming magagawa,” assured Tan.

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