by Jose Gabriel B. Pachoro
The relation between the national economy and taxes is complex. Depending on the circumstances, any movement, whether positive or negative, on either side can result in benefits or losses.
The state of a country's economy is indicated by its investment grade rating. A country's investment grade rating is the credit rating for government stocks or bonds, such as treasury shares. Government stocks or bonds are generally regarded as the most stable securities and carry minimal risks. These are usually issued to foreign governments to indicate the issuing country's economic status and stability.
The investment grade rating is usually indicated by three major credit rating agencies: Standard & Poor's (S&P), Moody's and Fitch Group. Of the three, S&P recently reaffirmed the BBB stable long-term sovereign credit rating of the Philippines. A bond is typically considered as investment grade by S&P if it is BBB- or higher. Under S&P's definitions, a BBB rating means an obligor, which in this case is the Philippines, has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to lead to a weakend capacity of the obligor to meet its financial commitments.
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