Moody's: Failure to control virus spike a 'credit negative' for PH

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Metro Manila (CNN Philippines, March 29) — The Philippine government's failure in confronting the coronavirus pandemic may result in a "credit negative," Moody's Investors Service warned following the decision to impose another hard lockdown.

It said the continuous quarantine restrictions imposed in the country in an aim to stomp out the surge in COVID-19 cases would further dampen efforts to revive the economy.

"Spike in coronavirus infections delays economic recovery, a credit negative," Moody's said in an issuer comment dated March 26, before the Duterte administration could even announce a stricter quarantine classification.

The debt watcher said that while the new measures, referring to the NCR Plus bubble, were "more forgiving" than the lockdowns implemented in 2020, it stressed that the move was in contrast to the eased restrictions elsewhere in the region, where infection rates are low or falling.

It said current retrictions would "unlikely" manage cases at better levels, adding that some restrictions will likely be in effect until the second quarter.

"The renewed measures will delay economic recovery, weigh on prospects for fiscal consolidation and exacerbate social risks," it said.

For this year, Moody's earlier said the Philippines may witness a 7.0% rebound in real gross domestic product. However, the current state threatens this forecast.

"Weaker economic growth diminishes prospects for fiscal and debt consolidation... [A] delayed recovery will have effects on labor markets that could exacerbate income inequality and poverty," it added.

The Treasury Bureau reported that the country's outstanding debt jumped 26.7% to ₱9.795 trillion in 2020 compared to the P7.731 trillion in 2019.

In August last year, the country entered into a recession as the economy plunged by 16.5 percent in the second quarter due to the Luzon-wide lockdown. It remains in recession, recording another 8.3 percent drop in the last three months of 2020.

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The Philippines is up for another nightmare as the government started on Monday the implementation of the ECQ in Metro Manila, Rizal, Cavite, Bulacan, and Laguna. The hard lockdown was originally targeted to end on April 4, but officials hinted at a possible extension.

Greeting the week, the Department of Health also said the country logged over 10,000 new COVID-19 cases, pushing the total to 731,894, of which 115,495 or 15.8% are active cases.

READ: Gov’t open to possible ECQ extension in NCR Plus — task force exec