Department of Budget and Management (DBM) Secretary Amenah Pangandaman expressed optimism the Philippines will receive an “A” credit rating within the term of President Ferdinand Marcos Jr. after global credit watcher Moody’s Rating affirmed its “Baa2” score with a stable outlook for the Philippines.
“This is a positive development, but this makes us only more determined to get an ‘A’ grade,” Pangandaman said in a statement.
He said the Philippines would likely get its first “A” rating within the next four years, after 10 years of being at “Baa2.”
“I am confident that as long as we stay on track with our agenda for prosperity, with our whole-of-government approach, we will achieve an ‘A’ rating with Moody’s under this administration,” she said.
The Philippines has enjoyed the investment-grade “Baa2” rating from Moody’s since 2014, as the country implemented reforms to liberalize the economy, fiscal consolidation efforts and robust macroeconomic fundamentals.
Moody’s said in a report dated Aug. 23, 2024 that “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.”
A “Baa2” rating means the Philippines has moderate credit risk, while an “A” rating means obligations are subject to low credit risk.
Moody’s is among the leading global credit rating agencies, publishing investor-oriented credit research, industry studies and risk analysis.
Moody’s said it expects the Philippines’ economic growth to remain high on resilient household consumption, public and private investments and increased exports.
Household consumption is seen to recover in the second half of 2024 as the impact of El Nino fades and the government’s interventions to reduce food prices take full effect.
Public and private investments are supported by the economic liberalization reforms that have been passed over the years, which have opened up high-value sectors to foreign investments.
The credit-rating agency expects foreign direct investments (FDI) inflows to continue to pick up in 2024 to 2025, driven by strong investor interest in the energy, manufacturing, and information and communications sectors.
Moody’s said the Marcos administration’s “Build, Better, More program” would help sustain infrastructure investments at 5 percent of gross domestic product (GDP) annually.
Finance Secretary Ralph Recto said Moody’s affirmation is another victory for Filipinos as this means greater access to more affordable financing to support projects.
With the latest affirmation, the Philippines has 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.
