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Manila Bulletin devider Business devider The Economy devider Marcos economic team bullish on 'A' credit rating upgrade on reform gains

Marcos economic team bullish on 'A' credit rating upgrade on reform gains

Published Oct 16, 2025 05:45 pm

At A Glance

  • Marcos' administration's economic team is optimistic that the Philippines is on track to securing a single-A sovereign credit rating by 2028, citing fast and promising gains in the government's growth-supportive reforms.
The Philippines’ economic managers in consultation at the Development Budget Coordination Committee (DBCC) meeting: (from left) Economy, Planning, and Development Secretary Arsenio M. Balisacan, Special Assistant to the President for Investment and Economic Affairs Secretary Frederick D. Go, Finance Secretary Ralph G. Recto, and Budget Secretary Amenah F. Pangandaman at the Development Budget Coordination Committee meeting. (DOF photo)
The Philippines’ economic managers in consultation at the Development Budget Coordination Committee (DBCC) meeting: (from left) Economy, Planning, and Development Secretary Arsenio M. Balisacan, Special Assistant to the President for Investment and Economic Affairs Secretary Frederick D. Go, Finance Secretary Ralph G. Recto, and Budget Secretary Amenah F. Pangandaman at the Development Budget Coordination Committee meeting. (DOF photo)
The Marcos Jr. administration’s economic team is optimistic that the Philippines will secure an “A” sovereign credit rating by 2028, citing rapid and promising gains from the government’s growth-supportive reforms.
Based on the midterm update of the country’s Medium-Term Fiscal Framework (MTFF) 2022-2030, published on Oct. 9, the Cabinet-level Development Budget Coordination Committee (DBCC) said the outlook remains positive, noting that the Philippines is “on track to achieve a single-A credit rating.”
This comes after Finance Secretary Ralph G. Recto revealed to reporters last Tuesday, Oct. 14, that debt watcher S&P Global Ratings scrapped its planned credit rating upgrade for the Philippines this year due to the eruption of cases involving alleged corruption in the government’s flood control budget.
S&P Global has held back on upgrading the Philippines’ BBB+ credit rating to A-, as the flood control fiasco raised a red flag for credit rating agencies.
“The country is in a strong position due to the fast implementation of ongoing structural reforms, sustained economic growth, and efforts to open key sectors to greater foreign ownership and investments,” the DBCC report read.
Late last year, the Department of Finance (DOF) pushed for the swift enactment of measures it said would “fast-track the entry of more foreign investors into the Philippines.”
Among these measures are the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act and the Public-Private Partnership (PPP) Code.
The CREATE MORE Act is forecast to reduce tax collections by ₱300 million this year, with forgone revenues rising incrementally to ₱1 billion in 2026, ₱1.7 billion in 2027, ₱2.9 billion in 2028, ₱3.6 billion in 2029, and ₱3.5 billion in 2030.
In August, President Ferdinand R. Marcos Jr. signed Republic Act (RA) No. 12252, allowing foreign investors to lease private land for up to 99 years, revising the previous 50-year limit. The law amends the Investors’ Lease Act to ensure more reliable long-term lease contracts and promote a stable investment climate.
It covers industrial estates, factories, agro-industrial projects, tourism, agriculture, agroforestry, and ecological ventures.
“Additionally, the continued diversification of the economy will enhance resilience and flexibility over time, paving the way toward a single-A rating,” the DBCC said.
However, the economic team lamented the heavy toll the Covid-19 crisis had on the country’s credit standing.
“The Philippines would have been likely upgraded if not for the Covid-19 pandemic, given its good track record of revenue mobilization and fiscal consolidation before the crisis,” the DBCC said.
Revenue effort—or the national government’s revenue-to-gross domestic product (GDP) ratio—from 2025 to 2029 is projected to be weaker than the 2024 level of 16.7 percent, which stands as the highest since 2000. It is expected to be slightly topped by 2030 at 16.8 percent.
Before the pandemic, the record high was 16.1 percent in 2019 before it dropped to 15.9 percent in 2020, further to 15.5 percent in 2021. It recovered to 16.1 percent in 2022 but declined again to 15.7 percent in 2023.
Recto, who serves as the current administration’s chief economic manager, cautioned that Congress’ attempt to lower the current 12-percent value-added tax (VAT) to 10 percent could hurt the country’s credit rating. VAT accounted for the bulk of the Bureau of Customs’ (BOC) revenue as of end-June.
Reducing the existing VAT rate would erode government revenue collections, which the DOF estimates would drop by an average of ₱300 billion annually—equivalent to about one percent of the country’s economic output.
Credit ratings assess a government’s creditworthiness and reflect the stability of its finances, which is closely linked to overall economic performance. As such, credit ratings serve as a proxy indicator of the economy’s health.
An investment-grade credit rating enables the government to secure loans at lower interest rates, which can, in turn, reduce borrowing costs for consumers and businesses. This is because banks often use government-issued debt as a benchmark for setting interest rates on loans.
The Philippines currently enjoys investment-grade credit ratings from the so-called “big three” debt watchers: Fitch Ratings, Moody’s Ratings, and S&P.
The Marcos Jr. administration aims to achieve “A” ratings from all three major credit rating agencies before it steps down in 2028.
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