Moody’s maintained its investment grade credit rating for the Philippines

Philippines’ future looks bright: Moody’s affirms investment-grade rating with stable outlook

BILYONARYO.COM

August 23, 2024

Moody’s Investors Service has maintained its “Baa2” credit rating for the Philippines, with a “stable” outlook.

The decision reflects the country’s successful economic reforms, efforts towards fiscal consolidation, and solid macroeconomic performance.

The ratings agency emphasized that recent reforms aimed at liberalizing the economy are expected to boost medium-term growth by enhancing the business climate and attracting foreign investment.

In the second quarter of 2024, the Philippine Statistics Authority reported a 6.3% year-on-year increase in GDP, while foreign direct investment net inflows surged by 15.8% to $4.0 billion from January to May 2024.

Moody’s projects continued growth in FDI through 2024-2025, driven by strong interest in the energy, manufacturing, and IT sectors.

The Marcos administration’s “Build Better More” infrastructure initiative, which aims to raise infrastructure investments to 5.0% of GDP annually, is also seen as a positive development.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. welcomed Moody’s rating affirmation, saying: “The BSP is encouraged by Moody’s decision and remains committed to working with the government to enhance the country’s credit profile. We are focused on maintaining price stability to support sustainable growth.”

The stable outlook reflects a balance of risks. Positive influences could come from improved fiscal metrics, robust growth, and increased investments, while potential challenges include external factors that may impact consumption and investment, or ineffective reforms.

An investment-grade rating signifies reduced sovereign risk, enabling cheaper financing and allowing for greater allocation of resources towards social programs and infrastructure projects.