RATING and Investment Information, Inc. (R and I) affirmed the Philippines’ ‘A-‘ investment-grade credit rating and maintained its ‘stable’ outlook on improving fiscal balance and expectations of sustained economic growth.
The Japanese credit rating agency on Friday announced that it affirmed the sovereign’s Foreign Currency Issuer Rating at ‘A-‘ and the Foreign Currency Short-term Debt at ‘a-1.’
‘R and I’s affirmation of the Philippines’ A- rating and Stable outlook recognizes the government’s fiscal consolidation efforts and the strength of our economic reforms,’ Finance Secretary Frederick D. Go was quoted as saying.
R and I said the fiscal balance has improved as a share of gross domestic product (GDP) and the government debt ratio is likely to ease in the medium term.
The debt ratio, at 63.2 percent in 2025, remains manageable and is expected to decline over the medium term due to the ‘improving’ trend in the fiscal deficit path, R and I said.
‘The government is pursuing fiscal consolidation while balancing economic growth,’ it said. ‘The country has a certain level of debt affordability, given the manageable level of interest payment burden.’
Economic expansion is likewise expected to continue, backed by population growth, infrastructure investment and inflows of foreign direct investment, it added.
However, R and I said this year’s economic growth is ‘highly likely’ to fall below the previous year’s level of 4.4 percent due to slower infrastructure spending affected by stricter validation and governance measures introduced following corruption allegations involving flood control projects.
Despite remittances staying stable amid ongoing tensions in the Middle East, R and I said rising energy costs have pushed up the cost of living and resulted in muted private consumption.
‘With the current account deficit and external debt remaining at manageable levels, there is limited concern on the external front,’ the rating agency added.
Stable surplus items, particularly remittances from overseas workers, continue to provide support, while the trade deficit reflects strong domestic investment and business activity, R and I said.
Higher imports of raw materials and intermediate goods for infrastructure projects help in laying the groundwork for future growth, it added.
‘Considering this structure, R and I believes that the present level of current account deficit does not necessarily have negative implications for the assessment of creditworthiness,’ it said.
The country’s foreign exchange reserves are also sufficient relative to imports, while net external debt remains low as a share of GDP, limiting external risks, R and I said.
The debt watcher also cited the stability of the Philippine banking sector as another factor supporting the sovereign’s credit profile.
‘The country’s resilience is supported by a sound banking system, an efficient payments system, and a healthy external position,’ Bangko Sentral ng Pilipinas Governor Eli M. Remolona Jr. said in a statement.
‘The BSP will continue to take a forward-looking and data-driven approach to monetary policy, financial supervision, payments oversight, and external sector management. These efforts help preserve stability and sustain confidence in the Philippine economy,’ Remolona added.
The Philippines’s sovereign credit ratings remain at investment-grade levels, with R and I and Japan Credit Rating Agency affirming their ‘A-‘ ratings.
Other major credit rating agencies have also maintained their investment-grade ratings on the Philippines, among them S and P Global Ratings at ‘BBB+,’ Fitch Ratings at ‘BBB’ and Moody’s Ratings at ‘Baa2.’