Debts are among the main sources of financing needed to maintain a strong growth trajectory.
Borrowings become an investment into the future when placed in the context of the 6 percent average gross domestic product expansion.
The leaping economic transformation draws investments, which in turn create jobs, lifting the economic condition of more Filipino families.
Well-off households mean a rapid rise in consumer spending, which again generates another wealth cycle of investments, jobs and higher income.
The self-perpetuating process of economic progress has been observed by credit rating agencies, earning for the country an A grade from Japan’s Rating and Investment Information Inc. (J&I) which means that the country is closer to the first-world level in terms of reliability. From a BBB+ with a positive outlook, the country got an A- with a stable outlook.
It was the second A mark from a Japanese credit watcher after the Japan Credit Rating Agency earlier issued the same rating on the country.
Credit grades are guides for investors and lenders to funnel, or not, money into the country. A high score means a lower cost of borrowed funds and the opening of the capital tap from businesses that do not want to miss out on an expanding market.
Among the sectors that have been popping the bubbly lately after the J&I boost were the investment promotion agencies such as the Philippine Economic Zone Authority (PEZA), which are now expecting ecozones to draw in unprecedented numbers of business projects.
“An A- with stable outlook rating is a testament that the Philippines remains a top destination for foreign investors with the country’s consistent high economic growth, strong fiscal position, and rosy economic outlook,” beams PEZA director general Tereso Panga.
He attributed the improved standing of the economy to the strategic investment generation and foreign direct investment gameplan drafted with the participation of President Ferdinand R. Marcos Jr. More specialized investment zones, thus, are on the drawing board.
PEZA officials recently met with executives of SM Smart City Infrastructure and Development Corp. for new ecozones and information technology (IT) parks exploiting the ubiquitous SM malls throughout the country.
Investments in advanced technologies tie in with a grand plan of SM to transform their properties into smart cities and townships.
PEZA and SM officials are encouraged by the economic prospects supported by new free trade agreements that are seen to usher in an economic renaissance.
The improved credit score would mean lower cost and affordable financing for the government, businesses and ordinary consumers, President Marcos said.
Significantly, he viewed the improved ranking of the government in terms of perception in the global community as “also an upgrade on the lives of ordinary Filipinos.”
Instead of paying high interest, public funds could be shifted to spending on public services like infrastructure, healthcare facilities, and the construction of school buildings.
Businesses know the value of opportunity costs, which equates to making difficult decisions when the situation is considered at its most conducive level.
Strike while the iron is hot. The interest rates on debts, mostly long-term, are now at their lowest due to the high credit score. Used as capital for growth, the borrowed funds pay for themselves many times over.