Japan-based R&I upgrades PH credit rating

Japan-based credit watcher Rating and Investment Information Inc. (R&I) upgraded its rating on the Philippines, citing the country's projected stable growth and the continuous improvement of its national income.

In a dispatch, R&I said it upgraded the Philippines' foreign currency issuer rating to "A-" with a stable outlook. An "A" rating indicates that the country has "high creditworthiness supported by a few excellent factors," while the minus or "-" indicates the relative standing within the rating category.

"The Philippine economy will likely see stable growth and continuous improvement in the level of national income against the backdrop of active public and private sector investments, development of domestic business sectors such as business process outsourcing, and favorable demographics among other elements," it said.

A higher credit rating is generally seen more favorably, as this would entail lower borrowing costs and more favorable terms for the country.

The Department of Budget and Management (DBM) said government spending amounted to P5.336 trillion in 2023, outpacing the expenditures seen the previous year. This year's budget authorizes a spending program of P5.767 billion for 2024.

"The fiscal balance as a share of gross domestic product, which had deteriorated during the COVID-19 pandemic, has improved and the government debt ratio will likely start falling in a year or two," R&I said.

Finance Secretary Ralph Recto on Wednesday said that while the country's debt is expected to hit P20 trillion by 2028, the economy is expected to grow at a faster rate and hit P37 trillion by then.

Data available from the Bureau of the Treasury (BTr) shows that the country's running debt stock reached P15.48 trillion as of end-June 2024, up 9.4% from P14.15 trillion the same period last year.

For his part, Recto welcomed the credit rating upgrade, as he said this shows high trust on the Philippine economy.

"Our refined medium-term fiscal program is our blueprint for our road to A rating. This ensures that we can reduce our deficit and debt gradually in a realistic manner, while creating more jobs, increasing our people's incomes, growing the economy further, and decreasing poverty in the process. Sticking to this program can help us get there faster," he said in a statement.

His sentiments were echoed by Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona Jr. who said the central bank will continue to promote fiscal stability moving forward.

"The BSP is committed to delivering on its mandate of promoting price stability, financial stability, and a safe and efficient payments and settlements system as this broadly supports sustained and inclusive economic growth," he said in a separate statement. — VDV, GMA Integrated News