For the first time ever, the Philippines becomes an investment grade country. Thanks to the ever-underestimated Pres. Benigno S. Aquino.
From Fitch Ratings:
Fitch Upgrades Philippines to Investment Grade; Outlook Stable Ratings Endorsement Policy
27 Mar 2013 2:32 AM (EDT)
Fitch Ratings-Hong Kong-27 March 2013: Fitch Ratings upgraded the Philippines’ Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BBB-’ from ‘BB+’. The Long-Term Local-Currency IDR has been upgraded to ‘BBB’ from ‘BBB-’. The Outlooks on both ratings are Stable. The agency has also upgraded the Country Ceiling to ‘BBB’ from ‘BBB-’ and the Short-Term Foreign-Currency IDR to ‘F3′ from ‘B’.
Key Rating Drivers
The upgrade of Philippines’ sovereign ratings reflects the following factors:
-The Philippines’ sovereign external balance sheet is considered strong relative to ‘A’ range peers, let alone ‘BB’ and ‘BBB’ category medians. A persistent current account surplus (CAS), underpinned by remittance inflows, has led to the emergence of a net external creditor position worth 12% of GDP by end-2012, up from 6% at end-2010. Remittance inflows were worth 8% of GDP in 2012 and proved resilient even through the shock of the global financial crisis. Fitch expects a rising import bill stemming from strong domestic demand to lead to a narrower CAS and to stabilise the net external creditor position at a strong level through to 2014.
-The Philippine economy has been resilient, expanding 6.6% in 2012 amid a weak global economic backdrop. Strong domestic demand drove this outturn. Fitch expects GDP growth of 5.5% in 2013. The Philippines has experienced stronger and less volatile growth than its ‘BBB’ peers over the past five years.
-Improvements in fiscal management begun under President Arroyo have made general government debt dynamics more resilient to shocks. Strong economic growth and moderate budget deficits have brought the general government (GG) debt/GDP ratio in line with the ‘BBB’ median. The sovereign has taken advantage of generally favourable funding conditions to lengthen the average maturity of GG debt to 10.7 years by end-2012 from 6.6 years at end-2008. The foreign currency share of GG debt has fallen to 47% from 53% over the same period.
-Favourable macroeconomic outturns have been supported in Fitch’s view by a strong policy-making framework. Bangko Sentral ng Pilipinas’ (BSP) inflation management track record and proactive use of macro-prudential measures to limit the potential emergence of macroeconomic and financial imbalances is supportive of the credit profile. Inflation has been in line with ‘BBB’ peers on average over the past five years.
-Governance standards, as measured in international indices such as the World Bank’s framework, remain weaker than ‘BBB’ range norms but are not inconsistent with a ‘BBB-’ rating as a number of sovereigns in this rating category fare worse than the Philippines. Governance reform has been a centrepiece of the Aquino administration’s policy efforts. Entrenching these reforms by 2016 is a policy priority of the government.
-The Philippines’ average income is low (USD2,600 versus ‘BBB’ range median of USD10,300 in 2012), although this measure does not account directly for the significant support to living standards from remittance inflows. The country’s level of human development (as measured in the United Nations Development Programme’s index) is less of an outlier against ‘BBB’ range peers.
-The Philippines had a low fiscal revenue take of 18.3% of GDP in 2012, compared with a ‘BBB’ range median of 32.3%. This limits the fiscal scope to achieve the government’s ambition of raising public investment. The recent introduction of a “sin tax”, against stiff political opposition, will likely lead to some increment in revenues and underlines the administration’s commitment to strengthening the revenue base.
The main factors that could lead to a positive rating action, individually or collectively, are:
-Sustained strong GDP growth that narrows income and development differentials with ‘BBB’ range peers. An uplift in the investment rate that enhances growth prospects without the emergence of macroeconomic imbalances.
-Broadening of the fiscal revenue base, as well as further improvements in the structure of the Philippine sovereign debt stock.
The main factors that could lead to a negative rating action, individually or collectively, are:
-A reversal of reform measures and deterioration in governance standards.
-Sustained fiscal slippage, leading to a higher fiscal debt burden.
-Deterioration in monetary policy management that allows the economy to overheat.
-Instability in the banking sector, leading to a crystallisation of contingent liabilities on the sovereign balance sheet.
The ratings and Outlooks are sensitive to a number of assumptions.
The agency assumes the Aquino administration will persist with its fiscal, governance and social reform agenda.
Fitch estimates trend GDP growth for the Philippines in a range of 5%-5.5%.
The ratings incorporate an assumption that the Philippines is not hit by a severe economic or financial shock sufficient to cause a significant contraction in GDP and trigger stress in the financial system. Fitch assumes that there is no materialisation of severe risks to global financial stability that could impact emerging market economies, such as a breakup of the euro zone or a severe economic crisis in China.
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Additional information is available on www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable criteria, ‘Sovereign Rating Criteria’, dated 13 August 2012, are available at www.fitchratings.com.
Applicable Criteria and Related Research
Sovereign Rating Methodology
No one really knows why Ms. Kristel Tejada killed herself. She left a suicide note. But it was cryptic.
“Mahal na mahal ko ang pamilya ko. At lahat din ng iba pang nagmamahal sa akin. Di ko lang talaga rin kinaya. Sana mapatawad at ipagdasal niyo ko. Salamat sa lahat magkikita pa ulit tayo. Sorry pero kailangan ko lang talagang gawin to (I love my family very much, and all those who love me. I just could not take it anymore. I hope that they will forgive me and pray for me. Thank you for everything and we will see each other again. Sorry but I really need to do this). Tandaan (Remember) : Without true love, we’re nothing.”
It is quite clear that Ms. Tejada’s suicide note made no mention of her tuition problems. But that did not stop student activists and leftist groups from blaming the UP financial assistance program, rising tuition fees, lack of budget for state universities and colleges, and the rich for oppressing the poor. That did not stop them from going on a rampage, defacing the walls of UP Manila, burning desks and chairs in PUP.
They had it all figured out – financial problems caused her suicide, the system killed her – even before all the facts were in.
But if it were true that she killed herself because the “system” drove her to it, then how come there are not more suicides among poor UP students? Don’t those activists realize that by attributing her suicide to her tuition problems they are implying that all those other students similarly situated are stronger than she was?
Of course they do but they are not going to let anything get in the way of their ideology and political agenda. If the suicide can be twisted to inflame class war, to bring about their great proletarian revolution, then they are not going to let that opportunity pass.
The fact is there could have been another reason for the suicide. But activists dismissed all other possible reasons outright because it would not sit right.
Bill Clinton once summarized the problem of ideologues, “the problem with any ideology is that it gives the answer before you look at the evidence. So you have to mold the evidence to get the answer that you’ve already decided you’ve got to have.”
And so the ideologues attacked the system without ascertaining first if the system was directly responsible for Kristel’s suicide. By so doing they belittled her character, she unlike the others was too weak to cope with the system.
They mocked her. They mock the dead. They used a dead girl’s mouth to convey their message. They turned her coffin into a prop. They turned her suicide into a weapon against the system they despise, into a tool to advance their great proletarian revolution. What assholes!
Ms. Kristel Tejada deserves more than just being turned into a tool. Let her rest in peace. Let her family grieve with some dignity.
“White smoke means a Pope has been elected. Black smoke means a Pope has not been elected. Or the Sistine Chapel is on fire.” – Philip Gilmore
The Papal election is the Holy Spirit’s show. God the Father and His son, Jesus, are limited to supporting roles in this drama. Cardinals chant “Veni, Creator Spiritus” imploring the intervention of the Holy Spirit to help them elect the right Pope. So the questions that naturally arise among inquisitive minds are, why is the Holy Spirit taking so long to intervene and why so many rounds of voting?
There are several theories to this mystery.
The long wait could indicate that the Holy Spirit is having a hard time making up His mind. Or maybe He has made up His mind but He is enjoying being at center stage for a change so He is playing out the drama for as long as He can, hopefully all the way up to Easter when Jesus, by tradition, gets to hog the spotlight again.
Or maybe He has already spoken but no one can hear Him. Because He speaks too softly and cannot be heard above the din of whispers for this or that papabile. It’s also possible the Cardinals are really hard of hearing. They have not heard the screams of the victims of sexual abuse, right? Then again maybe the Cardinals hear Him loud and clear but they won’t listen.
But why won’t they listen?
Maybe the Cardinals don’t believe it’s Him talking to them. Or maybe they think they know everything there is to know already. Or maybe they know it’s Him talking but they don’t care because they are papabile and they know that once elected Pope they can communicate directly with God the Father so why waste time on the Third Person in the Trinity. But there could be a simpler explanation: Cardinals don’t heed disembodied voices because they don’t believe in ghosts.
You probably think those theories are preposterous and border on blasphemy. I do. But let’s face it, the Catholic Church has serious problems.
Europe and America are losing Catholics faster than Asia, Africa, and South America are winning converts. Consequently, the Church needs a Pope with a better evangelization strategy than spreading the Good News through Tweeter and Facebook. Besides, it’s the message and the messengers more than the medium that needs tweaking. A change in the dress code might also help.
Secondly, the Church has to address the women problem. The majority of its faithful are women and yet the Church won’t allow women to become priests. Why? The Church owes women a more plausible explanation than Jesus reserved the priesthood for men and a more christian response than “go find something else to do”.
There is the problem of sexual abuse as well. It is not a new problem, it has been around from the very beginning. And it cannot be solved by public relations gimmicks like transparency or turning over offending priests to the criminal justice system.
The Church must analyze whatever it is that is causing the behavior. It cannot simply point to Original Sin as the root cause because ultimately everything goes back to that, at least as far as the Catholic explanation for human weakness goes. The Church does not have to go to the ultimate cause, it can look at intermediate causes.
It can study the asymmetrical power relationship between priests and the faithful. Power is an aphrodisiac for both priests and the laity. Maybe sexual desire cannot be eliminated but a readjustment of power relationships could transform sexual abuse to mutual consent, except in cases of pedophilia which is not exclusive to priests and is best left to behavioral scientists.
Since sexual desire cannot be eradicated, the Church will probably have to reconsider its ban on marriage for priests. That would entail doing a scientific study on homosexuality. The findings may shake the moral foundations of the Church but if it survived Galileo and Darwin it can certainly survive finding out that God also made homosexuals. Either way, allowing both heterosexual and same sex marriages for priests will bring up the problem of infidelity. It will also bring home the issue of safe sex and contraceptives.
Oh well, that’s why Pope Benedict said “I’m too old for this, I quit”.
“I would rather have a country run like hell by Filipinos than a country run like heaven by the Americans, because however bad a Filipino government might be, we can always change it.” – Pres. Manuel L. Quezon
I offended a number of people with my article last week, “Sabah is about self-determination, not historic title.” I was called a lying bastard, a traitor siding with Malaysia, a bourgoise reactionary, a sip-sip, a coward, and a yellow zombie, among other names. I was also accused of looking for a job in Malacañang and cherry-picking documents. All of that because I said the principle of self-determination, citing the non-binding opinion of a judge in the International Court of Justice, overrides historic title.
A whole system of beliefs rests on the primacy of historic titles. I came along to remind believers that political evolution had overtaken their religion and consequently the Kiram translation of an agreement between a sultan and a couple of British businessmen was now of secondary importance. Tsk-tsk, cluck-cluck. He committed heresy, let’s burn him at the stake.
But I love the heat from a burning stake.
I stand by what I wrote. The principle of self-determination overrides historic title. And it is not only the non-binding opinion of one judge in the ICJ that supports my view. I also have the United Nations Charter and a couple of international covenants to back me up.
Chapter 1, Article 1 of the UN Charter states the purposes and principles of the organization. Number two among those purposes is “To develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples, and to take other appropriate measures to strengthen universal peace.“
Self-determination is also addressed in more specific language in Article 1 of both the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.
“All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.”
The universal acceptance of the principle of self-determination signaled the end of the colonial age and the supremacy of historic title over the sovereign will of a people. Dozens of colonies in Africa, Asia, and the Middle East gained independence using the language of self-determination.
To argue that historic title overrides self-determination is to de-legitimize all independence movements. It is to say that people have no right to determine their political status, that they have no right to write their own story.
In 1898, Spain sold the Philippines to the United States. Those two countries took it upon themselves to decide the fate of a people that already won their independence. Filipinos had a constitution, a flag, an anthem, an army, and a government exercising sovereignty over territory. The only thing they lacked was international recognition. It was not given to them. It was given instead to the Treaty of Paris between Spain and the United States.
That is why, if you visit the Tomb of the Unknown Soldier in Arlington Cemetery in Virginia, USA, you will see that the Philippine-American War is referred to as the Philippine Insurrection. Because as far as the Americans are concerned it was not a war between two independent states, it was merely a rebellion by people that they had purchased from Spain.
In America’s eyes, the Treaty of Paris was America’s historic title to the Philippines and the Filipino peoples’ act of self-determination, that of winning a war of independence against Spain, counted for naught.
Would you accept the Treaty of Paris as a legitimate argument against the martyrs who sacrificed their lives to keep the hard-won independence of Filipinos from Spain? Would you honor America’s historic title over your forefathers’ act of self-determination?
Today, we want to elevate our claim to Sabah to the ICJ. We believe that Manila and Kuala Lumpur have the right to let the ICJ decide on the conflicting claims over the language of a business contract and consequently to determine the fate of more than a million Sabahans, an autonomous people that voluntarily joined Malaysia nearly half a century ago. That would be resurrecting the age of colonies – it is the Treaty of Paris reloaded – two capitals, Manila and Kuala Lumpur, deciding the destiny of a people not even invited to sit at the table. Tama ba ‘yan?
It has been said that the findings of both the Cobold Commission and the UN Secretary General regarding the express wishes of the people of Sabah prior to its joining Malaysia were questionable. That may have been true. At the time. But whatever chicanery may have happened then has been overtaken by time and events. By reality.
Sabahans have voted in numerous elections since Sabah joined Malaysia. Sabahans have been paying taxes. There are two Sabahans holding important portfolios in the cabinet of Malaysian Prime Minister Razak. If Sabahans were unhappy about joining Malaysia, they had fifty years to make their dissatisfaction known.
But where is the Sabah secessionist movement? Where is the Sabah for province of the Philippines movement? Where is the “we want to be subjects of the Sultan of Sulu” movement? And is there a problem with hundreds of thousands of illegal Sabahans in the Philippines or is the problem that of Filipino illegals in Sabah?
So I guess Sabahans are satisfied and happy to be in Sabah and Malaysian. Why can’t we respect that? Why do we want to wipe the smile off their faces with a historic title claim, turn them into Filipinos by judicial fiat instead of popular will? Why do we think it’s righteous to have a “Sabahans be damned as long as we get what we believe is ours” religion?
We can wave our historic title in the Sabahans’ faces until our arms fall off but if the Sabahans will not accept our sovereignty there is not much we can do about it. So my unsolicited advice is, rather than elevate our claim to the ICJ and possibly get a favorable judgment that may require military muscle to enforce, let us just convince the Sabahans that it’s more fun in the Philippines. That way maybe Sabah will ask to become a province of the Philippines.
There’s a difference between the Sabah claim and the claim to the Spratleys and Panatag. Sabah has been inhabited for thousands of years. The Spratleys became inhabited only after disputes over their ownership occurred. Meanwhile, Panatag awaits inhabitants. In Sabah, inhabitants have the right to exercise self-determination. In the Spratleys, the decisions of inhabitants are made by their home governments. In Panatag, the right of self-determination has yet to be extended to birds, fishes, and corrals.
In other words, whereas the South China Sea claims can be settled through historic titles, conventions on the laws of the sea and exclusive economic zones and all that, the Sabah claim can only be settled with the consent of the Sabahans. Our Constitution and our baselines laws have as much legitimacy as China’s nine-dash line map when it involves territory where there are people who have the universally recognized right to self-determination.
Let’s sort things out further.
It is wrong to say that Sabah is ours because Malaysia is paying us rent. Malaysia is not paying us rent. It is paying rent to the Kirams. The money goes to their bank account. It does not go to our bank account or to the government’s coffers.
Maybe the so-called rent payments are proof that the Kirams own Sabah but it’s a stretch to say that because Malaysia pays rent to the Kirams it is proof that the Philippines also owns Sabah.
If the Kirams do own Sabah and they believe they are not being compensated enough – their ancestor did not have the foresight to include an escalation clause in his lease agreement with the Brits – then they should spend their own money for lawyers to press their case; because all the proceeds will go to them if they get an upward adjustment of rentals.
Not a single centavo will go to the Philippine government or to you. The Philippine government won’t even be able to collect taxes on the income from rent if the payments to the Kirams are made in Malaysia. So what right do the Kirams have to demand that the Philippine government lawyer for them?
The de kahon answer to that rhetorical question is to point out that the government has a duty to stand by all citizens. Okay. Let’s say your uncle decides to live in Monte Carlo. He buys property there. After some time he decides he’s had enough of the high life. He authorizes his Monte Carlo lawyer to take care of his property. His lawyer cheats him. He loses his palace. Should the Philippine government spend taxpayers’ money to help your uncle recover his palace or should he spend his own money for a lawyer?
I suppose if the government is duty-bound to lawyer and spend taxpayers’ money for the Kirams’ property in Sabah then the government must likewise lawyer and spend taxpayers’ money for your uncle’s palace in Monte Carlo, right? Maybe you are okay with dipping into your savings and paying for your uncle’s bad business decision but do you believe the entire country should pay for it? Do you think it’s right for taxes to be spent that way? Maybe your uncle should change his name to Kiram. That way he will get blind public support demanding that government place its reputation and resources – both manpower and money – for his personal property claim.
I say let Mr. Kiram that self-proclaimed Sultan of Sulu spend his own money to fix his rental problems with Malaysia. And, as far as the Philippine government’s claim of sovereignty over Sabah is concerned, it is not for Manila, Kuala Lumpur, or the ICJ to decide the fate of Sabahans. That decision belongs to the Sabahans. By right. As a human right.
The principle of self-determination of peoples is the new paradigm. It replaced colonialism and humanity is better for it. Why bring back the dark age of colonial imperium?