R&I affirms the Philippines’ BBB+ rating, revises outlook to positive

Japan-based debt watcher, Rating and Investment Information, Inc. (R&I), affirmed the Philippines’ investor-grade credit rating at ‘BBB+’ and revised its outlook to positive from stable, due to the country’s robust macroeconomic fundamentals, improving fiscal position, sound banking system, comfortable external payments position, and stable political environment.

A ‘BBB+’ rating is two ranks higher than the minimum investment grade and just one notch below the ‘A-’ rating.

“R&I’s improved outlook on the Philippines brings us closer to our goal of an A rating within the President’s term. We are firmly on track to our ‘Road to A’ and remain committed to further improving the country’s investment climate through structural reforms to enhance the quality and pace of infrastructure development,” Finance Secretary Benjamin E. Diokno said.

A positive outlook indicates the possibility of a rating upgrade once performance indicators such as the economic growth sought under the Philippine Development Plan 2023-2028, stable macroeconomic conditions, and improving trend of fiscal position have been confirmed.

To this end, the government is steadfast in its commitment to fiscal consolidation through the country’s first-ever Medium-Term Fiscal Framework (MTFF) which will help bring down the debt-to-GDP ratio to less than 60 percent by 2025, cut the deficit-to-GDP ratio to 3.0 percent by 2028, and maintain infrastructure spending at 5 to 6 percent of GDP.

This will be implemented alongside the strategies outlined in the PDP 2023-2028 to reinvigorate job creation and accelerate poverty reduction by steering the economy back on a high-growth path.

According to the report, the Philippine economy performed well amid the volatile global landscape, citing its decelerating inflation rates and strong private consumption and investments.

R&I also noted that the country’s strong gross domestic product (GDP) performance in 2022 (7.6 percent) has followed through to 2023.

​​The Philippine economy grew by 6.4 percent in the first quarter of 2023, making it the fastest-growing economy among R&I-rated peers, such as Indonesia and Mexico. This performance is within the government’s growth target of