The Philippines is expected to secure credit ratings of “A” or higher from the major debt watchers by 2028, Finance Secretary Ralph Recto said Tuesday.
Recto said in a news briefing the government is making progress in reducing its deficit-to-GDP and debt-to-GDP ratios, in line with its fiscal framework. An “A” rating from the three major credit rating agencies—Moody’s, Fitch, and S&P—indicates a strong capacity to repay debt, which would lead to lower interest rates and more favorable loan terms for the country.
“Our fiscal framework plan is to reduce the deficit to about 3.8 percent of gross domestic product by 2028, so we’re following the plan,” Recto said.
Given the government’s strong fiscal performance, Recto noted that the interest rate spreads on the country’s debt have also been decreasing. He also highlighted the Philippines’ recent credit rating upgrade from Japan’s Rating and Investment Information Inc. (R&I).
“We did get a credit rating upgrade from R&I, which is a Japanese rating agency, and we are conscious about our fiscal program and our ‘Road to A’. Of course, by 2028, we want that all the rating agencies will give us a Grade of A. Even A-minus will be welcomed,” he said.
Recto said that economic growth averaged 6.0 to 6.1 percent in the first two years of the Marcos administration, which is “one of the highest for all Presidents since we began tracking GDP.”
Japan’s Rating and Investment Information Inc. (R&I) upgraded the Philippines’ credit rating to ‘A-’ with a stable outlook, the first under the Marcos administration, on Aug. 14, 2024.
R&I cited the Philippines’ macroeconomic stability, high economic growth path and continuous improvement in fiscal balance as key factors for the rating upgrade.
R&I noted that the Philippine government has been pursuing fiscal consolidation efforts while also emphasizing support to economic growth.
The upgrade allowed the Philippines to already achieve two A- ratings, the first of which was given by Japan Credit Rating Agency (JCR) in 2020.
The country also maintained its high investment-grade status across all major regional and international debt rating agencies.
Moody’s affirmed the Philippines’ investment-grade credit rating of “Baa2” with a “stable” outlook on Aug. 22.
Fitch Ratings earlier maintained the Philippine BBB rating, while S&P also kept its BBB+ rating for the country.
