Japan-based credit agency Rating and Investment Information Inc. (R&I) has upgraded the Philippines’ foreign currency issuer rating to “A-” with a stable outlook. This upgrade reflects the country’s projected stable economic growth and continuous improvement in national income.
Key Points of the Upgrade
R&I’s “A” rating signifies high creditworthiness with strong economic factors, while the minus (“-“) indicates the country’s relative position within the rating category. The upgrade is based on several positive economic indicators:
- Economic Growth: The Philippine economy is expected to maintain stable growth, driven by active investments from both public and private sectors.
- Domestic Development: Growth in domestic sectors like business process outsourcing and favorable demographics are key contributors.
- National Income: Continuous improvement in national income levels bolsters economic stability.
Economic and Fiscal Highlights
The upgrade comes at a time when government spending and economic activity are on the rise:
- Government Spending: The Department of Budget and Management (DBM) reported that government expenditures reached P5.336 trillion in 2023, with a budget of P5.767 trillion authorized for 2024.
- Fiscal Health: The fiscal balance as a share of GDP, which worsened during the COVID-19 pandemic, has improved, and the government debt ratio is expected to decrease within the next two years.
Finance Secretary Ralph Recto expressed optimism about the economic outlook, noting that while the national debt is projected to hit P20 trillion by 2028, the economy is expected to grow to P37 trillion by the same year. As of the end of June 2024, the country’s debt stock stood at P15.48 trillion, a 9.4% increase from the previous year.
Official Reactions
Secretary Recto welcomed the credit rating upgrade, highlighting the significance of the refined medium-term fiscal program as a blueprint for achieving an “A” rating. This program aims to reduce the deficit and debt gradually while fostering job creation, income growth, economic expansion, and poverty reduction.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. echoed these sentiments, emphasizing the central bank’s commitment to fiscal stability. He stated that the BSP will continue to promote price stability, financial stability, and an efficient payments and settlements system to support sustained and inclusive economic growth
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