Manila: Moody's Ratings affirmed its investment-grade rating on the Philippines at Baa2, with a 'stable outlook,' citing government measures to boost the domestic economy amid challenges. 'The ratings affirmation reflects our expectation that stabilization in the Philippines' fiscal metrics over the next two years will be supported by a gradual recovery in economic growth from the current cyclical slowdown and the government's continued commitment to fiscal consolidation,' the credit rater said in a news release Monday night.
According to Philippines News Agency, Moody's noted that 'the government has strong access to domestic and international funding markets and sufficient foreign-currency reserves to weather global capital flow volatility.' It explained that 'these credit strengths are balanced against weakening debt affordability, some constraints on the quality of institutions, low-income levels, and the sovereign's high exposure to physical climate risks.'
On the rating's Stable outlook, Moody's said this 'reflects a balance of risks,' vis-a-vis the risks from the inflationary impact of the Middle East crisis and recovery in public spending following the investigation of the flood control program and investors' sentiments, among others. 'Nonetheless, the Philippines' medium-term growth potential and underlying credit fundamentals remain broadly supportive of the rating, even as the recovery in confidence may take time. These strengths are balanced against the risk that a more persistent slowdown or pre-election spending pressures weigh on fiscal consolidation, or that reform momentum and confidence recover more slowly amid political noise ahead of the 2028 election, or that debt affordability continues to deteriorate beyond our baseline expectations,' it added.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr., in a statement, said 'the rating decision recognizes the economy's ability to withstand global economic headwinds.' 'On the part of the BSP, we will continue working to bring inflation back close to target, safeguard the soundness of the country's banking system, promote a safe and efficient payments and settlements system, and prudently manage the country's international reserves,' he said. These moves, he added, 'help preserve macroeconomic and financial stability, which supports sustainable and inclusive growth.'
Finance Secretary Frederick Go, in a separate statement, said they 'welcome the stable outlook credit-rating affirmation, even as the world deals with real headwinds.' 'Moody's assessment confirms our strong macroeconomic fundamentals, and that the reforms we've put in place are working,' Go said.
