Moody’s affirms PH’s investment-grade credit rating at ‘Baa2’

Global credit watcher Moody’s Ratings has affirmed the Philippines' investment-grade credit rating at “Baa2” with a stable outlook on the economy, taking into account the country’s liberalization and fiscal consolidation efforts.

This development was disclosed by the Bangko Sentral ng Pilipinas (BSP) on Friday.

BSP Governor Eli Remolona Jr. said the central bank “welcomes Moody’s affirmation of the country’s investment-grade rating.”

“We are taking a measured approach in safeguarding price stability conducive to sustainable economic growth,” said Remolona.

Under Moody’s ratings scale, Baa2 is one notch above the minimum investment grade.

Citing the credit watcher, the BSP said Moody’s attributed its affirmation of the Philippines’ credit rating to the country’s reforms to liberalize the economy, fiscal consolidation efforts, and robust macroeconomic fundamentals.

“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,” according to Moody’s.

In the second quarter of 2024, the country’s economic growth, as measured by gross domestic product (GDP), clocked in at 6.3%.

Moreover, foreign direct investment (FDI) net inflows from January to May 2024 increased by 15.8% to $4.0 billion, from $3.5 billion during the same period in 2023.

Moody’s is expecting FDI inflows into the country to continue rising in 2024 to 2025. 

The credit watcher noted that inflows will be driven by strong investor interest in the energy, manufacturing, and information and communications sectors. 

It also pointed out Marcos administration’s goal of increasing infrastructure investments at 5% of GDP annually under the “Build Better More” initiative, which will reduce the country’s infrastructure gap.

Meanwhile, Moody’s stable outlook reflects a balance of risks. 

The credit watcher said that upward credit pressure could come from improved fiscal metrics, strong growth, and higher public and private investments, while downward risks include external challenges that could weaken consumption and investment or ineffective reforms.

An investment-grade rating signifies low sovereign risk, helping the country secure cheaper funding and redirect funds from interest payments to social programs and projects.—AOL, GMA Integrated News