Why do credit ratings matter you say and what has it got to do with the Philippines. Credit ratings do matter (to politicians) and power brokers and the information thats disseminated down to the Filipino people is manipulated.
Typically, like you see at local level where the ambulances and bus shelters have been plastered with promotional messages like “lovingly provided by Counsellor (or Mayor) Bing Bong Bang” for example, you will find equally manipulative messages from Manila aka “the top” spouting good deed and so forth. It’s all bullshit.
Let’s look firstly at Credit Ratings and Credit ratings agencies. Credit ratings express an agency’s opinion about the ability and willingness of any issue – governments, financial institutions, corporations, insurance companies and structured finance – to meet its financial obligations in full and on time.
There are more than 70 agencies around the world. But three dominate, controlling 91% of the global market. They are Standard & Poor’s, Fitch and Moody’s. Though there are slight differences in the rating scales that the big agencies use, all fall into two broad categories. These are an investment and speculative grades. The investment grades range from AAA, very high credit quality, to BBB-, moderate credit risk. There are eight other notches between AAA and BBB-. Other agencies may differ with their gradings.
So why would the Philippines care about credit ratings?
First, the ratings act as a kind of moral suasion that compels developing countries to pursue more prudent and sensible monetary and fiscal policies. Sovereign ratings serve as an incentive for sound financial and budgetary policies because performance on these systems forms an integral part of the rating methodologies.
Second, a favourable rating enables governments and companies to raise capital in the international financial market.
Last April 24, 2015, Standard & Poor’s Financial Services (S&P) reaffirmed the BBB Stable long-term sovereign credit rating of the Philippines, the highest rating ever recorded in the country’s history. This set the country’s credit rating a notch greater than the minimum investment grade status granted to it by S&P on May 2, 2013, making the Philippines more internationally competitive and attractive to investments.
And how does this influence investment into the Philippines?
Institutional investors in both the developed and developing world rely heavily on rating agencies in making investment decisions. This is because credit ratings are primarily opinions about credit risk. Ratings provide insight into the credit quality of an individual debt issue and the relative likelihood that the issuer may default. A lot of institutions are governed by investment “mandates” therefore, the better the risk profile of a country, the more companies will invest and the worse off a risk profile of a country, investment firms will avoid.
So what has this all got to do with manipulative Filipino politicians who will lie to their people and Filipinos know this but do nothing about it. Its like the same as when a Filipino says “where’s my gift” and you look pissed off and they say “joke lang”. Nothing gets done, they never face retribution for being such fuckheads and the bad social manners continues generation after generation.
So to does the lies about investment ratings. You see, sin taxes on alcohol and beer didn’t come about from the goodness of a Filipino politicians heart to direct money into hospitals and other social services.
Bloomberg back in 2012 before the taxes were introduced said – Philippines Needs to Boost Sin Tax to Win Ratings Upgrade
The Sin Tax were pushed as a result of the Philippines government taxing alcohol at a differential rate to the imported booze. The local alcohol was typically significantly cheaper than imported product and the US and EUROPE took the Philippines to court and won a ruling on this issue. That’s why the tax increases (which on a percentage basis to product price) were SIGNIFICANT. The media at the time said it was a social measure. That is fucking bullshit.
The article stated The Philippines must pass a law increasing the excise levy on liquor and tobacco, or sin tax, to meet its goal of winning an investment-grade rating in four years, Tax Commissioner Kim Henares said.
So there you go. Taxes and the lack of taxes affect in the whole scheme of things the metrics of the investment grade in the country. The taxes were unpalatable to a lot of people and therefore, Filipino hogwash media took the bullshit hook line and sinker from the politicians as to why the taxes were being introduced. They rarely mentioned at all the WTO ruling against the country.
Little was said about the WTO decision in the media back in 2011. You can see here Philippines to review alcohol taxes after WTO decision – The Philippines will examine taxes on foreign alcohol products following a World Trade Organisation decision that the current system was discriminatory and the trade minister said the government will look at how to assist affected local distillers.
The Philippine taxes foreign alcoholic beverages at rates 10 to 40 times higher than brands made from locally-produced materials such as cane and palm sugar — which the WTO found did not conform to global trade rules. “While we are disappointed with the decision, we understand that it is a final decision of the WTO.”
And so it goes, taxes were raised around a year later following that directive from the WTO which in turn went into the “metrics” of investment grade rating boost.
So what other bullshit goes into investment grade ratings?
From what I see – social metrics. Yes, social metrics includes human trafficking and “transparency” such as ratings from transparency international to statistics on improved spending on infrastructure, that’s how I see it as there’s a whole grab bag of things apparently that make up social metrics and I have seen comments in the media how moody’s was happy with social changes in place in the Philippines.
Bar girls being rounded up and claimed to have been “rescued” by the cops. It seems sometimes that the cops are running to a quota of rescues. I wonder what this is all about? Bars flourish in most places in the Philippines yet the cops will target select bars. I have met bar owners who pay the cops and in turn the cops are paid by some NGO’s to raid bars. ICATT is a US NGO that pays cops to raid bars as well as have spotters looking out for older foreigners travelling around younger girls. Do these fucks know how corrupt the system is on the ground level? that the very people they are paying are in fact being paid by the bars and businesses to avoid being raided? And that there are many cases and it’s well known that the cops setup foreigners in places like Angeles and arrest the-the foreigners then demand money for release? Do these ICATT fuckers really know who they are playing with I mean, do they really know Filipino’s.
Do simple searches online, you will see what goes on with foreigners and how Filipino cops and government workers extort money from Foreigners coming to the Philippines. See – Here … and Here… but many cases don’t make the media and the money are paid and that’s it, end of story.
Basically, the government doesn’t care about its women in the Philippines. It knows it has a problem with Prostitution in many cities, yet lets prostitution flourish out of control and you know where the cops fit into all this. They are the “middle men”.
Rule 1 is – If a Filipino politician has a warm and fuzzy promise for something, there’s likely something else driving it. Take the example above, The sin taxes (new tax) on Alcohol was forced by a WTO decision, not because politicians said this is a good idea. Then they woke up to the fact more taxes = more money in.
#2 – There’s a lot of bullshit and jostling going on and partly its to improve the ratings of the country to welcome the hoard of foreigners wanting to join the gold rush aka do business in the Philippines. Let’s see. Many companies have been here, started, been burned and left.Published in