The Japan Credit Rating Agency (JCR) has affirmed the Philippines’ investment-grade credit rating of “A-” with a stable outlook, based partly on pronouncements of the Marcos administration to prioritize fiscal consolidation and infrastructure projects.
In a report dated March 10, JCR cited the Philippines’ “high and sustained economic growth performance underpinned by solid domestic demand and its resilience to external shocks supported by an external debt kept low relative to GDP (gross domestic product) and the accumulation of foreign exchange reserves.”
The credit watchdog said that, on the other hand, reduction of income disparity through rural development remains an important task.
JCR added that the Philippine economy in 2022 has exceeded the prepandemic level, thanks to strong private consumption as the COVID-19 pandemic subsided.
The agency noted that the eight-month-old Marcos administration has made it clear that it intends to continue and further develop the basic stance taken by the former administration, which emphasized infrastructure development as its policy.
And as the budget deficit remained high at 7.3 percent of GDP in 2022, JCR noted that the Marcos administration has affirmed its commitment to fiscal consolidation through its Medium-Term Fiscal Framework.
Also, the public-sector debt-to-GDP ratio remains above 50 percent, registering at 60.9 percent at the end of 2022.
Lowest ratios
Still, JCR said this was one of the lowest ratios among the sovereigns that it had rated in the A-range.
“Hence, JCR does not consider that fiscal soundness will be impaired,” it added. “Remittances from Filipinos abroad remain solid and the economy stays highly resilient to external shocks.
Reacting to this, Finance Secretary Benjamin Diokno said the Marcos administration is indeed committed to maintaining sound macroeconomic fundamentals and achieving its fiscal targets by continuing the course of sound fiscal management.
Diokno said the country’s recent structural reforms would also enable the country to withstand the pandemic shocks and map a route to recovery.
He said the economic team was taking a comprehensive approach to address the short-term uptick in inflation, while pursuing medium- to long-term measures to stabilize food inflation, ensure food security and lower the cost of living for all Filipinos. INQ