Philippines keeps 'A-' credit rating from JCR

The Japan Credit Rating Agency, Ltd. (JCR) has kept the Philippines’ investment-grade credit rating of “A-” with a stable outlook on the back of the country’s “high and sustained economic growth”, according to a report by Philippine Daily Inquirer.

In a statement on Wednesday, JCR, whose ratings matter for Japanese investors, said it believes that the government will maintain its fiscal soundness.

“High and sustained economic growth supported by solid domestic demand, a low-level external debt, its resilience to external shocks supported by accumulated foreign exchange reserves, and its solid fiscal base,” the Japan-based credit rating agency said.

An investment-grade rating indicates lower credit risk, thus allowing a country to access funding from development partners and international debt capital markets at lower cost.

This enables the government to channel funds that would have otherwise been allotted for interest payments to socially beneficial programs and projects.

Growth outlook

The Philippine economy grew by 5.6 percent in 2023, one of the best expansions in Asia but was nevertheless below the Marcos administration’s 6 to 7 percent target for last year.

JCR said it expects the country’s real gross domestic product (GDP) to expand by around 6 percent in 2024, supported by a recovery of external and tourism demand, as well as solid private consumption underpinned by a subdued rise in prices and stable flow of remittances from overseas Filipinos.

The credit rating agency also noted the robustness of the country’s foreign currency liquidity position.

BSP Governor Eli Remolona Jr. welcomed JCR’s decision, saying “our external payments position will continue to remain manageable, supported by sustained foreign exchange inflows.”

JCR likewise observed that the government debt-to-GDP ratio at the end of 2023 was about 60 percent, one of the lowest among the sovereigns rated in the A-range.

But the debt watcher said reducing income disparity through rural development and infrastructure development “remain important tasks to be addressed” for the country.