Headline Dec 13, 2014/



MOST OF THE DEVELOPING  COUNTRIES  are up to their eyeballs in debt. And competing demands of needs and applications at home,  are just about enough, to do them in.

Many emerging  economies rely on foreign creditors to bridge the gap between their exports and imports.

The Philippines is a bit different. It relies on overseas employers.

Over  10 million  Filipinos, equivalent to about a quarter of the country's labour force, live or work abroad,  permanently or temporarily,  legally or illegally, in just over 200 countries.

Their remittances are equivalent  to  8.5%  of  GDP, helping the country to plug its trade deficit and amass over  $80 billion  of currency reserves.

As a result, the Philippines has become a net creditor to the rest of the world not just a net supplier of labour.

These impregnable external finances are one reason why Fitch, a ratings agency, awarded the  Philippines  its first ever investment grade credit rating. The upgrade was long awaited and warmly greeted.

The governor of the central bank was at first quoted as saying that it represented ''the seal of God'', which might be the nicest thing anyone has ever said about a rating agency. 

His actual words were more mundane: he said it was  ''the seal of good.............good housekeeping''.

Both this government and its predecessor have worked hard to put the country's fiscal house in order, reducing its debt from  68%  of GDP  in 2003  to  41% in 2013, while refinancing it more cheaply-

Lengthening its maturity   -to over ten years on average-  and increasing the proportion of denominated in pesos,  for which the world shows a strong appetite.

Now the government is going beyond housekeeping to much needed repairs. The public finances rest on narrow foundations: the government collected less than 13% of GDP in taxes in  2012, a paltry ratio:

That helps explain why public investment amounted to less than  3%  of the economy. To raise revenues, in 2012  passed a  ''sin tax''  on tobacco and alcohol, which survived the Senate by a single vote and came into effect on January 1st, 2013.

In a country with powerful brewers and tobacco farmers,  the tax took ''political courage'' , says Andrew Colquhoun of Fitch.

In principle, the upgrade should widen the pool of investors willing to buy the government's debt and lower its cost of borrowing.

Graduation to investment grade reduces the  ''spread''  between a country's borrowing costs and American Treasury's yields by over a third, according to Laura Jaramillo and Catalina Michelle Tejada of the IMF.

But the Philippines does not suffer from a lack of foreign-investor interest. Indeed the central bank has been fretting about excessive capital inflows, which might push up the peso or lead to inflation or asset bubbles.

Perhaps the upgrade, and the progress it reflects, will persuade some overseas workers to return to the Philippines.

That would be the most convincing seal of approval for the economy.

And on Sam daily times : The voice of the voiceless, the students of Philippines stand tall,  and second only to one:

The archipelago has never been more creditworthy -nor have the great students of Philippines more credit worthy.

With respectful dedication to the Students, Professors and Teachers of Philippines. See Ya all on !WOW!   -the World Students Society Computers-Internet-Wireless:

''' System Reboot '''

'''Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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