Japan Credit Rating Agency affirmed on Friday the Philippines’ investment-grade credit rating of ‘A-’, with a stable outlook despite global uncertainties and a high-inflation environment.
The affirmation confirmed the country’s strong macroeconomic fundamentals, as evidenced by the strong growth performance in 2022 at 7.6 percent that exceeded the 6.5 percent to 7.5 percent growth assumption of the Development Budget Coordination Committee.
Labor and employment conditions continued to improve in the Philippines, with generally steady and low unemployment and underemployment rates since the end of 2022.
A credit rating of ‘A-‘ with a stable outlook indicates lower credit risk and entails better access to the international bond market and favorable interest rates. It also increases investor confidence in the country that may lead to more foreign direct investments.
JCR noted the country’s resilient banking system, which remains “healthy on stronger payment capacity and improving employment situation.”
The national government’s outstanding debt settled at 60.9 percent of gross domestic product in 2022, lower than the 61.8-percent target under the Medium-Term Fiscal Framework.
The Bureau of the Treasury’s latest cash operations report showed that the government’s budget deficit narrowed to 7.3 percent of GDP in 2022 from 8.6 percent in 2021. The latest fiscal outturn was also better than the MTFF target for 2022 at 7.6 percent.
“The Marcos administration is committed to maintaining sound macroeconomic fundamentals and achieving its fiscal targets by continuing the course of sound fiscal management. The country’s recent structural reforms will also enable the country to withstand the pandemic shocks and map a route to recovery,” Finance Secretary Benjamin Diokno said in a statement.
He said the government would continuously implement reforms to foster investment-led growth to help broaden opportunities for quality employment and further enhance productivity.
He said the government is adopting a whole-of-government approach to tackle the elevated inflation. The Bangko Sentral ng Pilipinas said it is ready to take all necessary policy actions to bring inflation to within the target range of 2 percent to 4 percent over the medium term.
Fiscal authorities are also taking a comprehensive approach to address the short-term uptick in inflation, while pursuing medium- to long-term measures to stabilize food inflation.
Under the Philippine Development Plan 2023-2028, the government aims to steer the country towards a path that promotes inclusive growth, provides equal opportunities to Filipinos and enables them to participate in an innovative and globally competitive economy.
