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October 01, 2022

Japan-based debt watcher keeps BBB+ rating, stable outlook for Philippines

Tokyo-based Rating and Investment Information Inc. (R&I) has maintained the Philippines’ credit rating at BBB+ with a “stable” outlook, citing the economy’s solid growth recovery, healthy government finances, rising investments, and a stable banking sector, among other favorable indicators.

BBB+ is two notches higher than the minimum investment grade, while a “stable” outlook indicates that the rating is likely to stay the same over the near term.

“While the world continues to face the challenges of the pandemic, the Philippine economy has been demonstrating solid growth since the second quarter of 2021,” R&I said.

The gross domestic product (GDP) of the Philippines grew by 5.7 percent last year, reversing the previous year’s pandemic-driven recession wherein the economy shrank by 9.6 percent.

Philippine economic managers are looking at a faster GDP growth of seven to nine percent this year.

R&I added that the government debt ratio is expected to stabilize in the near term, supporting the country’s economic recovery.

While government debt has risen following massive spending on the COVID-19 response, the debt level remains manageable at 60.5 percent (debt-to-gross domestic product ratio) as of end-2021 compared to a number of the country’s rating peers.

Finance Secretary Carlos G. Dominguez welcomed the latest assessment from R&I.

“With this development, the Philippines maintains its streak of affirmations of our investment grade credit ratings throughout the pandemic amid the wave of rating downgrades globally. This is a testament to our ability to strike a careful balance between supporting economic recovery, such as through relief for vulnerable sectors and infrastructure investments, and maintaining order in our fiscal house,” Dominguez said.

For his part, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the coordinated approach to recovery has worked well for the economy.

“On top of the national government’s measures, the BSP’s proactive COVID-19 response — including historic-low policy rates that supported credit activities, time-bound financing support to the national government, and a long list of regulatory relief measures for banks so that they may continue serving their customers — has helped achieve a holistic approach to Philippine economic recovery,” Diokno said.

The Philippines’ daily COVID-19 cases significantly declined from a high of 39,000 cases in mid-January this year to 272 as of April 10. Moreover, as of the same day, 74 percent of the country’s target population (90 million) had already been inoculated.

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