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DOF: Japan credit watcher affirms ‘A-‘ rating for Philippines

The Department of Finance (DOF) said Friday that the Japan Credit Rating Agency (JCR) has affirmed the Philippines’ investment-grade credit rating with a stable outlook despite a high inflation environment and global uncertainties.

Citing a report by the JCR, released March 10, the DOF said the Japanese debt watcher affirmed the country’s “A-“ rating.

A credit rating of “A-“ with a stable outlook indicates lower credit risk and entails better access to the international bond market and favorable interest rates.

The Finance Department said such a rating increases investor confidence in the country, which may lead to more foreign direct investments (FDIs).
“The affirmation confirms the country’s strong macroeconomic fundamentals, as evidenced by the strong growth performance in 2022 at 7.6% that exceeded the 6.5 to 7.5% growth assumption of the Development Budget Coordination Committee (DBCC),” the DOF said.
The agency said the country’s labor and employment conditions also continue to improve, with generally steady and low unemployment and underemployment rates since the end of 2022.
It added that the JCR also cited the country’s resilient banking system, which remains “healthy [due to] stronger payment capacity and [an] improving employment situation."
In 2022, the national government’s outstanding debt settled at 60.9% of gross domestic product (GDP), lower than the 61.8% target that was set in the Medium-Term Fiscal Framework (MTFF).
Likewise, the Bureau of the Treasury (BTr)’s latest cash operations report showed the national government’s budget deficit narrowed down to 7.3% of GDP from 8.6% in 2021.
The latest fiscal outturn is also better than the MTFF target for 2022 at 7.6%.
“The Marcos administration is committed to maintaining sound macroeconomic fundamentals and achieving its fiscal targets by continuing the course of sound fiscal management. The country's recent structural reforms will also enable the country to withstand the pandemic shocks and map a route to recovery,” said Finance Secretary Benjamin Diokno.
The DOF said the government will continuously implement reforms to foster investment-led growth, which will help broaden opportunities for quality employment and further enhance productivity.
To tackle elevated inflation, the government is adopting a whole-of-government approach, it said.

The Bangko Sentral ng Pilipinas (BSP) stands ready to take all necessary policy actions to bring inflation within the 2% to 4% government target over the medium term, it added.  — VBL, GMA Integrated News