Fitch upgrades Philippines credit outlook to ‘stable’

Global credit watcher Fitch Ratings has upgraded its credit outlook for the Philippines to and affirmed the country’s credit rating of “BBB.”

In its rating action commentary, Fitch said it revised the outlook on the Philippines’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to “stable” from “negative.”

“The revision of the outlook to ‘stable’ reflects Fitch's improved confidence that the Philippines is returning to strong medium-term growth after the COVID-19 pandemic, supporting sustained reductions in government debt/GDP, after substantial increases in recent years,” the credit watcher said.

As of the first quarter of 2023, the country’s debt-to-gross domestic product (GDP) ratio stood at 61%, down from 63.5% in the same quarter last year. 

In a separate statement, Finance Secretary Benjamin Diokno said that “the improved outlook for the Philippines to ‘stable’ is a testament to the country’s robust macroeconomic fundamentals, as evidenced by the economy’s strong growth performance in 2022 at 7.6% and 6.4% in the first quarter of 2023.”

Fitch is expecting the Philippine economy to grow above 6% over the medium term, stronger than the median “BBB” growth rate of 3%.

The New York-based credit watcher also affirmed the country’s rating of “BBB,” which is above the minimum investment grade.

A rating within the 'BBB' category means that expectations of default risk are currently low and the capacity for payment of financial commitments is considered adequate.

“Fitch’s latest rating action reflects the strong economic activity which can be fostered by the improved investment climate in the country. The country’s growth is further supported by the steady improvement of our labor and employment conditions,” Diokno said.

“We will continue to rely on structural reforms that will broaden opportunities and enhance the country’s productivity, particularly through higher investments in infrastructure. The full implementation of the six-year Medium-Term Fiscal Framework will support these investments while promoting fiscal sustainability,” he said. — RSJ, GMA Integrated News