Japan’s Rating and Investment Information, Inc. (R&I) has upgraded the Philippines’ credit rating to A- with a stable outlook, citing the country’s strong economic stability, growth, and improved fiscal balance.
In its report released on Wednesday, August 14, R&I upgraded the Philippines from BBB+ with a favorable outlook last year to A- this year.
The latest rating marks the second A- rating for the country after Japan Credit Rating Agency, Ltd. awarded the country the same grade in 2020.
“The Philippine economy has been showing fast growth among the major economies in Southeast Asia. As inflation decelerated from its two-year peak in January 2023, the economy has been growing at a pace that surpasses the previous year since early 2024,” according to R&I.
R&I also mentioned the country’s strong external situation, which helps to lower inflation, stable banking industry, enough foreign exchange reserves, consistent inflows from overseas Filipino remittances and foreign direct investments.
It also acknowledged that although stressing support for economic growth, the Philippine government has been working on fiscal consolidation initiatives.
“The government has higher budget allocation for education and, social welfare, on top of infrastructure investment, while pushing ahead with the measures aimed at expanding tax base,” the R&I said.
Emphasizing that its debt remains reasonable given a reasonable load of interest payment, it believes that the fiscal deficit and central government debt as a percentage of gross domestic product (GDP) will continue to drop from their peak during the pandemic.
The debt-watcher from Japan also praised the efforts of the Marcos government toward initiatives to guarantee economic stability, hasten infrastructure development, increase private investments, and generate jobs to raise household income and hasten the decline of poverty.
According to the Philippine Statistics Authority, the country’s Gross economy grew by 6.3% year-on-year in the second quarter of 2024.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona then applauded R&I’s credit rating improvement in the Philippines.
“The BSP is committed to delivering on its mandate of promoting price stability, financial stability, and a safe and efficient payments and settlements system as this broadly supports sustained and inclusive economic growth,’’ Remolona said.
In a separate statement, Finance Secretary Ralph Recto said the high credit rating of the Philippines gives creditors and investors a strong indication of confidence, which lowers borrowing rates for the government and the business.
Budget Secretary Amenah Pangandaman, for her part, said that reaching the government’s target of an “A” investment grade rating calls for a whole-of-government approach.
Pangandaman said that maintaining the high rate of economic growth of the Philippines depends on a whole-of-government strategy.
“A whole-of-government approach to strengthening our economy will certainly help us achieve an ‘A’ credit rating,” she said.
A- signifies an investment-grade rating and less credit risk, so enabling a nation to access funds from international debt capital markets and development partners at less cost.
It also helps the government direct money meant for interest payments to initiatives and projects benefiting society. (TCSP)
