QUEZON CITY (PIA) -- Japan-based credit rating agency, Rating and Investment Information, Inc. (R&I), has recently affirmed the Philippines' credit rating at 'BBB+' with a positive outlook.
This rating reflects the country's strong macroeconomic fundamentals, improving fiscal position, stable political environment, sound banking system, and comfortable external payments position. It serves as a testament to the government's commitment to structural reforms and fiscal consolidation, which are aimed at enhancing the investment climate and accelerating infrastructure development.
“R&I’s improved outlook on the Philippines brings us closer to our goal of an A rating within the President’s term. 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,” Finance Secretary Benjamin Diokno said.
The positive outlook assigned by R&I indicates the potential for a rating upgrade in the future, contingent on the achievement of key performance indicators such as sustained economic growth and an improved fiscal position. The Philippine government has been steadfast in its efforts to achieve these goals, implementing a range of policies and initiatives to drive economic growth and address fiscal challenges.
One of the key factors contributing to the positive rating is the country's robust economic performance. In the first quarter of 2023, the Philippines recorded a GDP growth rate of 6.4%, making it one of the fastest-growing economies in the region. This strong economic growth has been driven by various factors, including robust domestic consumption, increased government spending on infrastructure projects, and steady inflows from remittances and foreign direct investments.
The government's aggressive infrastructure spending has been a crucial driver of economic growth. Under the "Build, Better More" program, the Philippines aims to address the country's infrastructure gaps by investing heavily in various sectors, including transportation, energy, water resources, and social infrastructure. These investments not only boost economic activity but also create jobs and improve the overall quality of life for Filipinos.
In addition to infrastructure development, the Philippine government has also implemented fiscal reforms to strengthen its fiscal position. This includes measures to increase revenue collection, improve tax administration, digitalization, and rationalize government spending. These efforts have resulted in a gradual reduction of the country's fiscal deficit and a steady decline in its debt-to-GDP ratio, signaling a more sustainable fiscal trajectory.
The positive assessment of the Philippines' external payments position is another contributing factor to the favorable credit rating. The country has a comfortable level of foreign exchange reserves, which provides a buffer against external shocks and helps maintain stability in the foreign exchange market. Additionally, the Philippines benefits from a steady inflow of remittances from overseas Filipino workers, as well as foreign direct investments, which contribute to the country's external payments position.
Overall, the 'BBB+' credit rating positions the Philippines favorably in the global financial market. It demonstrates the country's creditworthiness and lower credit risk, allowing it to access funding from development partners and international debt capital markets at lower costs. This, in turn, supports the government's efforts to finance its infrastructure projects and promote sustainable economic growth.
The affirmation of the Philippines' credit rating at 'BBB+' with a positive outlook by R&I is a proof to the country's strong macroeconomic fundamentals, improving fiscal position, stable political environment, sound banking system, and comfortable external payments position.
It reflects the government's commitment to structural reforms and fiscal consolidation, as well as its efforts to drive economic growth through aggressive infrastructure spending.
With this positive rating, the Philippines is well-positioned to attract investments, access funding at lower costs, and achieve its goals of sustainable development and improved credit ratings in the future. (DOF / PIA-NCR)
