Credit rating agency Fitch Ratings has affirmed the Philippines’ ‘BBB’ credit rating and upgraded its outlook from ‘negative’ to ‘stable’ on Monday.

“The improved outlook for the Philippines to ‘stable’ is a testament to the country’s robust macroeconomic fundamentals, as evidenced by the economy’s strong growth performance in 2022 at 7.6 percent and 6.4 percent in the first quarter of 2023,” Finance Secretary Benjamin Diokno said following the release of Fitch’s rating report.

According to the report, the revision of the outlook to ‘stable’ reflects Fitch’s improved confidence in the Philippines’ return to strong medium-term growth after the COVID-19 pandemic, sustained reductions in the country’s debt-to-GDP ratio, and the country’s sound economic policy framework.

Fitch forecasts that the Philippines’ real GDP growth will reach above 6 percent over the medium term, higher than the median ‘BBB’ growth rate of 3 percent.

“Fitch’s latest rating action reflects the strong economic activity which can be fostered by the improved investment climate in the country. The country’s growth is further supported by the steady improvement of our labor and employment conditions,” Diokno added.

A rating of ‘BBB’ sits above the minimum investment grade and suggests that expectations of default risk are low. It also indicates the ability of the country to meet its financial commitments

A sovereign investment-grade rating signals a country’s creditworthiness and allows it to access funding from development partners and international capital markets at lower cost.

The decision of Fitch reflects its concurrence with the National Government’s (NG) fiscal consolidation process and assessment of sustainable debt dynamics.

The Department of Finance (DOF) stressed its commitment to maintaining the stability of the country’s macroeconomic fundamentals through prudent fiscal management.

“We will continue to rely on structural reforms that will broaden opportunities and enhance the country’s productivity, particularly through higher investments in infrastructure. The full implementation of the six-year Medium-Term Fiscal Framework will support these investments while promoting fiscal sustainability,” Diokno said. DOF Communications Office