Moody's Investors Service on Tuesday raised the outlook on the Philippines' Ba2 rating to 'positive' from 'stable', citing the government's effective management of the country's public finances.
The decision was based on Moody's expectation that the government will continue the process of fiscal and debt consolidation. The agency also noted the government's improved ability to finance its debt.
Moody's expects revenue growth to improve further upon the passage of legislation aimed at restructuring excise taxes on alcohol and tobacco products.
Nevertheless, the report noted that the Philippines may need deeper structural reforms for revenue mobilization to catch up to levels similar to its rated peers.
Moody's changed the outlook on the Ba2 rating for the country's central bank, the Bangko Sentral ng Pilipinas (BSP), to 'positive' from 'stable'.
The report said that the sovereign's vulnerability to global financial market shocks has been reduced by the build-up of foreign exchange reserves.
The agency also observed that the economy remains sensitive to external demand, despite its relatively low level of openness to trade.
Moody's also changed its outlook for the Philippines' Baa3 long-term foreign currency bond ceiling and its Ba2 long-term FC deposit ceiling to 'positive.'
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