The Japan Credit Rating Agency, Ltd. (JCR) has spotlighted the Philippines’ high and sustainable economic growth as well as successful fiscal consolidation efforts in its recent reaffirmation of the country’s high investment-grade of ‘A-’ with a stable outlook.
“Through government-led infrastructure projects, the economy has maintained strong growth driven by solid private consumption and fixed capital formation. High growth is expected to be retained over the medium term,” JCR said in its report.
“The fiscal consolidation efforts promoted by the Marcos Jr. administration under its Medium-Term Fiscal Framework has been successful, and JCR expects the country’s fiscal soundness to be sustained,” it added.
Finance Secretary Ralph G. Recto welcomed the development, calling it another strong vote of confidence in the Marcos Jr. administration’s development agenda that will benefit all Filipinos.
An ‘A-’ rating signals strong macroeconomic stability and robust creditworthiness. This translates to lower borrowing costs for the government and businesses, more foreign direct investments, and ultimately more jobs for Filipinos.
“Mas maraming Pilipino ang makikinabang dahil sa patuloy na tiwalang ibinibigay sa atin ng mga credit rating agencies. Dahil dito, mas dadami ang papasok na investments, mas maraming magandang trabaho ang malilikha, at mas maraming Pilipino ang maiaahon natin sa kahirapan,” he said.
The rating affirmation also came at an opportune time, as the Philippines has been placed on Index Watch-Positive by J.P. Morgan, signaling the country’s potential inclusion in the bank’s global bond index. Such inclusion would significantly increase exposure of Philippine government bonds to foreign investors, further lowering borrowing costs and providing an additional boost to economic growth.
“This back-to-back good news shows that global institutions recognize the Philippines’ strong fundamentals and sound reforms. The message is clear: our growth story is only getting stronger,” he added.
Sustainable economic growth
In reaffirming its rating, JCR highlighted that the Philippines has consistently maintained a high growth rate of around 6% in recent years. This performance has been anchored on solid domestic demand, low external debt, and resilience against external shocks supported by ample foreign exchange reserves.
The agency said growth will be further sustained under the Marcos Jr. administration’s Build Better More program, with the newly enacted Public-Private Partnership (PPP) Code expected to boost private sector participation in infrastructure projects.
It also recognized the enactment of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act as a measure that has strengthened the tax incentives regime and improved the business operating environment.
JCR also noted that inflation has eased significantly, while the poverty rate is declining faster than expected, driven by agricultural modernization and rising wages.
Successful fiscal consolidation efforts
JCR affirmed that the Philippines’ fiscal position is sound, with both debt and deficit on a gradual downward trajectory over the medium term through effective and efficient public spending.
It noted that the country’s central government debt-to-GDP ratio stood at 60.7% at the end of 2024, remaining at a low level among sovereigns rated in the A range by the agency.
JCR also recognized ongoing revenue-enhancing reforms, such as the Capital Markets Efficiency Promotion Act (CMEPA), which reduces transaction costs and modernizes taxation of passive income to make the Philippines more competitive, regionally aligned, and investor-friendly.
It likewise highlighted the Ease of Paying Taxes Act, which promotes simpler and more accessible tax compliance by allowing taxpayers to file returns electronically or manually through the File-and-Pay Anywhere Scheme.
“The Marcos Jr. administration is implementing a range of policies aimed at fiscal consolidation, infrastructure development, poverty reduction, and other objectives, with steady progress achieved so far,” the JCR report said. (DOF)
