PHL faces climate-related credit risk

THE PHILIPPINES is among the countries most vulnerable to climate-related credit risks as extreme weather imperils the country’s economic and fiscal stability, Fitch Ratings said.

- By Katherine K. Chan Reporter

"We expect physical climate risks to have an adverse (effect) on the Philippines economy and public finances through various channels," Edward Parker, Fitch Ratings managing director and global head of research, sovereigns and supranationals, told BusinessWorld in an email.

"Unfortunately, more frequent and severe storms and flooding will cause loss of life, and damage to homes, infrastructure and business that will cause disruption to economic activity, associated loss of tax revenues and rebuilding costs," he added.

In a recent report, Fitch determined that the Philippines faces one of the highest physical risk pressures on credit by 2050.

"Fitch Ratings believes the Philippines is one of the sovereigns most exposed to physical climate risks, based on an array of data and climate projections that feed into our Climate Vulnerability Signals," Mr. Parker said. "It is particularly exposed to more frequent and severe storms and floods, and to a lesser extent to sea level rise."

"We do not view it as particularly exposed to transition risks," he added.