Marcos Administration Explains That “Negative” in Credit Rating Context Means Something Completely Different From What It Sounds Like
Bohiney Magazine | The London Prat
Fitch Downgrades Philippines Outlook to Negative, Government Clarifies This Is Actually Quite Positive When You Think About It
MANILA — Fitch Ratings has revised its outlook on Philippine sovereign debt from Stable to Negative, citing the Middle East oil crisis, a collapse in infrastructure spending, inflation projected at 6.3 percent for 2026, and what the report diplomatically describes as “governance uncertainties,” which is rating agency language for “the two most powerful political families in the country are openly trying to destroy each other and we are not sure this is the ideal environment for fiscal discipline.”
The Palace responded by noting that JPMorgan Chase has simultaneously announced plans to include Philippine sovereign bonds in its flagship emerging-market index by January 2027, a development it described as “proof that international confidence in the Philippines remains robust,” setting aside the question of whether a credit rating agency and an index provider are measuring the same thing or whether the administration has noticed they are not.
The Inflation Picture
The Bangko Sentral ng Pilipinas is raising interest rates to combat projected 6.3 percent inflation driven largely by the energy shock from the Strait of Hormuz conflict. Real interest rates are currently negative 1.5 percent, meaning the central bank is, as one analyst quoted in Manila Bulletin’s economic analysis put it, “running to stand still.” This is not the preferred direction of economic management. The BSP disagrees only on the question of whether it had a choice.
The Infrastructure Gap
The government’s “Build, Better, More” infrastructure program has stalled due to anti-corruption investigations into procurement irregularities. This has created the unusual situation in which the effort to stop stealing has also stopped building, which economists at BusinessWorld note is technically progress of a sort, though not the sort that builds roads. Infrastructure spending creates economic multipliers. Corruption investigations create headlines. The Philippines currently has more of the second than the first.
Markets in London similarly rally on hope and panic on facts; the Philippines has discovered a third mode: rally on JPMorgan inclusion, panic on Fitch, govern in between. The peso fell 0.4 percent on the news. Official sources said they do not comment on currency movements. The peso continued falling without comment.
SOURCE: https://bohiney.com/zohran-mamdani-discovers-budget-hack/