The Marcos administration is confident that it is on track to earn an ‘A’-level credit rating by 2028, according to Finance Secretary Benjamin Diokno. This statement comes as Japan-based rater Rating and Investment Information Inc. (R&I) affirmed the Philippines’ investment-grade credit rating of “BBB+” and revised the outlook to “positive.”
In its statement, R&I acknowledged that the Philippine economy has been performing well despite global economic uncertainty. The credit watchdog also noted that the country’s fiscal deficit is improving and expects the government debt ratio to start declining from 2023.
R&I also recognized the Marcos administration’s efforts in addressing key infrastructure development and implementing structural reforms, which are expected to contribute to raising income levels. The agency stated that it will upgrade the rating once factors such as the economic growth path outlined in the Philippine Development Plan 2023-2028, the stable macroeconomic condition, and the improving trend of the fiscal position are confirmed.
A BBB+ rating on R&I’s scale is considered two notches higher than the minimum investment grade and just one notch below an “A-” rating, which represents the lowest A-level rating.
Secretary Diokno expressed satisfaction with R&I’s improved outlook, stating that it brings the Marcos administration closer to their goal of achieving an ‘A’ rating within the President’s term. He further emphasized the benefits of an investment-grade rating, which allows countries to access funding from development partners and international debt capital markets at lower costs due to reduced credit risk.
To help achieve an A-level rating, the government is focused on fiscal consolidation through the implementation of the Medium-Term Fiscal Framework. This framework aims to reduce the debt level to less than 60 percent of gross domestic product (GDP) by 2025, decrease the budget deficit-to-GDP ratio to 3 percent by 2028, and maintain infrastructure spending at 5 percent to 6 percent of GDP.
