Japan-based debt watcher Rating and Investment Information Inc. kept the country’s 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.
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.
R&I said that 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” and that “the government debt ratio is expected to stabilize in the near term, supporting the country’s economic recovery.”
The Philippine economy grew by 5.7 percent last year, reversing the previous year’s pandemic-driven recession. The rebound was punctuated by the rise in foreign direct investments to a historic high of $10.5 billion last year.
It said while government debt rose following massive spending on the COVID-19 response, the debt level remained 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.
“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,” Finance Secretary Carlos Dominguez said.
“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,” he said.
Dominguez said the government is committed to achieving full economic recovery soon, while mindful of staying within the boundaries of fiscal discipline, so that the debt burden from the COVID-19 crisis is not passed on to future generations.
“We are optimistic about the economy’s prospects ― our COVID situation has improved and the latest economic reforms are seen to bring in more job-generating investments for the Filipino people,”Dominguez said.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the coordinated approach to recovery ― with the central bank’s monetary measures complementing the national government’s fiscal response ― 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 government expects the economy to achieve full recovery and post growth between 7 percent and 9 percent.