Japan Credit Rating Agency affirms PH’s A- credit rating

THE Japan Credit Rating Agency Ltd. (JCR) on Thursday affirmed the Philippines’ investment-grade credit rating of “A-” with a “stable” outlook, citing the country’s sustained economic growth.

“The ratings mainly reflect Philippines’ high and sustained economic growth supported by solid domestic demand, low-level external debt, and resilience to external shocks supported by accumulated foreign exchange reserves,” the JCR said in a report.

An investment-grade rating signals low credit risk and favorable financing terms for critical public services and infrastructure.

For this year, the agency projects Philippine economic growth to remain in the upper five percent range, supported by robust domestic demand despite uncertainties in the external environment.

The JCR cited several reforms that the government implemented to help boost growth.

These include the Marcos administration’s “Build Better More” program, which aims to ramp up infrastructure spending, enhancing the country’s infrastructure competitiveness by leveraging private-sector investments through public-private partnerships and the passage of the Create More Act to enhance ease of doing business, clarify the scope of value-added tax (VAT), rationalize the VAT and excise tax refund system and clarify income tax benefits.

“These measures have strengthened tax incentives and improved investment environment,” it said.

The JCR said the country’s poverty rate is also declining at a faster-than-expected pace due to increased average hourly wages.

The credit rating agency also cited the country’s strong external position and ample foreign exchange reserves, as well as government efforts towards fiscal consolidation under the medium-term fiscal framework.

The JCR said despite increased uncertainty due to changes in US tariff policies, the Philippines’ foreign exchange liquidity position remains solid, and the JCR expects the economy to retain high resilience to external shocks going forward.

“The Marcos Jr. administration, which took office in June 2022, is implementing various policies aimed at achieving fiscal consolidation, infrastructure development and poverty alleviation, and has been making steady progress to date,” it said.

“JCR expects that economic growth and fiscal improvement through government’s efforts will enhance the country’s creditworthiness. It will continue to monitor developments closely.”

In a separate statement, Bangko Sentral ng Pilipinas Gov. Eli Remolona Jr. welcomed JCR’s credit rating affirmation.

“JCR’s affirmation will support and strengthen investment from Japan, one of the Philippines’ most important partners. The BSP will continue to safeguard price and financial stability to boost the country’s resilience amid global headwinds,” Remolona said. / PNA