Philippines earns second a-level credit rating from Japan’s R&I

MANILA, Philippines – The Philippines has secured another A-level credit rating, as Japan-based Rating and Investment Information, Inc. (R&I) upgraded the country’s rating from “BBB+” with a positive outlook to “A-” with a stable outlook.

This is the second A-level rating for the Philippines, following a similar upgrade by the Japan Credit Rating Agency in 2020.

R&I attributed the upgrade to the country’s macroeconomic stability, strong economic growth trajectory, 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,” R&I stated in its report.

The agency also highlighted the Philippines’ robust external position, easing inflation, and a stable banking sector as key factors supporting the upgrade.

The country’s ample foreign exchange reserves and consistent inflows from Overseas Filipino remittances and foreign direct investments further strengthened its economic standing.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona welcomed the news, emphasizing the central bank’s role in maintaining economic stability.

“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,” Remolona said.

Recent data from the Philippine Statistics Authority shows that the country’s Gross Domestic Product grew by 6.3% year-on-year in the second quarter of 2024.

Meanwhile, inflation has averaged 3.7% over the first seven months of the year, which falls within the BSP’s target range of 2% to 4%.

The BSP projects a continued downtrend in inflation beginning in August.

The country’s banking system has also demonstrated resilience, with significant growth in assets, loans, and deposits, coupled with strong capitalization and liquidity.

Additionally, the BSP surpassed its 2023 goal of digitalizing half of the country’s retail payments, with digital transactions now making up 52.8% of the total.

An “A-” rating is an investment-grade rating that indicates lower credit risk, allowing the Philippines to access international funding at more favorable rates.

This rating also enables the government to redirect funds from interest payments to more socially beneficial projects.