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The Philippines has clinched an A- investment grade rating from another Japan-based credit rating agency. Rating and Investment Information, Inc. (R&I) upgraded its rating on the Philippines from the “BBB+” with positive outlook last year, to “A-” with stable outlook. This is the second A-level rating the country has secured after the Japan Credit Rating Agency, Ltd. upgraded the country to “A-” in 2020.
In its decision to upgrade the rating, R&I cited the Philippines’ macroeconomic stability, high economic growth path, and favorable fiscal outlook. “The Philippine economy has been showing fast growth among the major economies in Southeast Asia. As inflation decelerated from its two-year peak in January 2023, the economy has been growing at a pace that surpasses the previous year since early 2024,” according to R&I. The Japan-based debt watcher also cited the country’s robust external position, easing inflation, stable banking sector, sufficient foreign exchange reserves and stable inflows from Overseas Filipino remittances and foreign direct investments. Bangko Sentral ng Pilipinas (BSP) Governor welcomed R&I’s upgrade of the Philippines’ credit rating. “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,’’ Governor Remolona pointed out. The Philippine Statistics Authority reported that Philippine Gross Domestic Product expanded by 6.3 percent year-on-year in the second quarter of 2024. Inflation, meanwhile, averaged 3.7 percent during the first seven months of the year, which is within the BSP’s target range of two to four percent. The BSP said inflation could follow a general downtrend beginning August. The banking system also continues to support the country’s financial needs with robust growth in bank assets, loans, deposits, coupled with adequate capitalization and liquidity. Moreover, the BSP surpassed its target of digitalizing half of digital payments volume in the country by 2023, with the share of digital to total monthly retail payments rising from 42.1 percent in 2022 to 52.8 percent in 2023. “A-” indicates an investment-grade rating and lower credit risk which allows a country to access funding from development partners and international debt capital markets at lower cost. It also enables the government to channel funds that would have otherwise been allotted for interest payments to socially beneficial programs and projects. The stable outlook indicates R&I’s opinion on medium term prospects for the rating, while a positive outlook by R&I indicates that it will upgrade rating once factors it is examining are confirmed.
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