Rating and Investment Information, Inc. (R&I), a Tokyo-based debt watcher, has kept its investor-grade credit rating for the Philippines at ‘BBB+’ while revising its outlook to positive from stable.
The Department of Finance (DOF) shared in a statement Monday that R&I affirmed the Philippines’ ‘BBB+’ rating and revised outlook to positive as the debt watcher sees the country’s “robust macroeconomic fundamentals, improving fiscal position, sound banking system, comfortable external payments position, and the stable political environment”.
“A positive outlook indicates the possibility of a rating upgrade once performance indicators such as the economic growth sought under the Philippine Development Plan 2023-2028, stable macroeconomic conditions, and improving trend of fiscal position have been confirmed,” the DOF said.
DOF Secretary Benjamin Diokno said revising the outlook upward brings the country closer to the government’s goal of securing an ‘A’ rating during the term of President Ferdinand R. Marcos Jr.
The current rating is two notches below the ‘A’ rating goal of the administration.
Countries with good investment-grade ratings can tap financing from development partners and international debt markets as they have seen that these borrowers have lower credit risk factor.
“We are firmly on track to our ‘Road to A’ and remain committed to further improving the country’s investment climate through structural reforms to enhance the quality and pace of infrastructure development,” Diokno said.
The DOF said R&I has cited the Philippines to be the fastest-growing economy among R&I-rated peers, such as Indonesia and Mexico, which performed well despite the volatility in the global economic landscape as the country eased inflation while private consumption and investments also backed economic activities.
“The debt watcher emphasized that it does not view the country’s current account deficit in a negative light due to the government’s aggressive infrastructure spending that will redound to economic growth. On external payments, R&I also took note of the country’s steady inflows from overseas Filipino remittances and foreign direct investments (FDIs), as well as its sufficient foreign reserves,” it said.
The agency added the government remains committed to bring down debt-to-gross domestic product (GDP) ratio to below 60 percent by 2025 and reduce the deficit-to-GDP ratio to 3 percent by 2028, while maintaining the infrastructure expenditure at 5 to 6 percent of GDP. (PNA)
