Moody’s Ratings on Friday affirmed its investment-grade rating of “Baa2” with a stable outlook for the Philippines, citing the country’s economic liberalization, fiscal consolidation and strong macroeconomic fundamentals.
“The passage of reforms over the past several years to liberalize the Philippine economy will support medium-term growth potential by supporting a business-friendly environment and attracting foreign investments,” Moody’s said in a statement.
The last time the debt watcher affirmed its rating on the Philippines was in September 2022.
Finance Secretary Ralph Recto said the assessment reflects the agency’s confidence in the country’s robust medium-term economic growth prospects due to the enactment of investment-friendly reforms as well as the government’s continued fiscal consolidation efforts.
“Moody’s affirmation is another victory for Filipinos as this means greater access to more affordable financing to support our projects. These will create more quality jobs, increase incomes, and reduce poverty incidence in the country. With our growth-enhancing fiscal consolidation plan in place, we ensure that we have adequate fiscal space to invest on infrastructure, education, human capital development, and social protection programs, which have the high multiplier effects on the economy,” Recto said.
The Philippines’ gross domestic product (GDP) grew 6.3 percent in the second quarter of 2024, faster than the first quarter’s upwardly-revised 5.8 percent and 4.3 percent in the second quarter of 2023.
This brought the average expansion in the first half of the year to 6 percent, representing the lower end of the government’s 6-percent to 7-percent target band.
Moody’s said it expects foreign direct investment (FDIs) to the Philippines to remain strong until next year, driven by placements in the energy, manufacturing and information and communications sectors. With Domingo Juan, Ralph Harvey Rirao
Data showed that in the first five months of 2024, FDIs registered net inflows of $4 billion, up by 15.8 percent from $3.5 billion in same period last year.
Moody’s also cited the Marcos government’s target to sustain infrastructure spending to account for 5 percent of GDP annually through the “Build Better More” program.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. welcomed Moody’s decision and said the government is working “to improve the country’s ratings.”
“We are taking a measured approach in safeguarding price stability conducive to sustainable economic growth,” he said.
The BSP said the stable outlook on the country’s ratings “reflects a balance of risks.”
“Upward credit pressure could come from improved fiscal metrics, strong growth, and higher public and private investments, while downward risks include external challenges that could weaken consumption and investment or ineffective reforms,” it said.
“An investment-grade rating signifies low sovereign risk, helping the country secure cheaper funding and redirect funds from interest payments to social programs and projects,” it said.
Recto said with the latest affirmation, the Philippines successfully maintained its high investment-grade status across all major regional and international debt rating agencies, with two coveted A- ratings from Japanese rating agencies. With Domingo Juan, Ralph Harvey Rirao
