PH Retains ‘BAA2’ Credit Rating from Moody’s with Stable Outlook

The country has maintained its investment-grade credit rating of “BAA2” with a stable outlook, according to a press release by Bangko Sentral ng Pilipinas (BSP). The credit rating agency Moody’s cited economic reforms, fiscal discipline, and strong macroeconomic performance as key reasons behind the rating.

Moody’s highlighted the country’s efforts to liberalize the economy, which are expected to sustain medium-term growth and attract more foreign investments.

“The passage of reforms over the past several years to liberalize the Philippine economy will support medium-term growth potential by supporting a business-friendly environment and attracting foreign investments.” the agency noted.

Recent data shows the economy’s resilience, with the Philippine Statistics Authority reporting a 6.3% year-on-year GDP growth for the second quarter of 2024.

Foreign direct investment (FDI) net inflows also grew by 15.8% from January to May, reaching USD 4.0 billion compared to USD 3.5 billion in the same period last year.

Moody’s expects the upward trend in FDI to continue, driven by investments in energy, manufacturing, and information and communications sectors.

The government’s push to increase infrastructure investments to 5% of GDP annually under the “Build Better More” program is also seen as a key factor in closing the country’s infrastructure gap.

BSP Governor Eli M. Remolona, Jr. welcomed Moody’s assessment, affirming the agency’s confidence in the country’s economic stability.

“The BSP welcomes Moody’s affirmation of the country’s investment-grade rating, even as we work with the government to improve the country’s ratings. We are taking a measured approach in safeguarding price stability conducive to sustainable economic growth,” he said.

While Moody’s outlook remains stable, it highlighted that the Philippines’ credit standing could improve further with stronger fiscal metrics and increased public and private investments. However, the agency also flagged potential risks, including external challenges that could affect domestic consumption and investment. (ASC)