The Duterte administration’s economic managers said the decision by the Rating and Investment Information Inc. (R&I) keeping the Philippines’ investment grade status was a vote of confidence on the economy’s COVID-19 recovery and growth prospects.

In a statement, Finance Secretary Carlos G. Dominguez III said on Friday, April 23, that the Japanese debt watcher R&I has maintained the Philippines credit rating of “BBB+” with a “stable” outlook.

BBB+ is a notch away from the minimum rating within the A-territory ratings, while a “stable” outlook indicates absence of factors that may cause the rating to change over the short term.

Dominguez said R&I has recognized that the country had strong macroeconomic fundamentals ahead of the pandemic, which enabled the government to accelerate spending on urgent and necessary programs to save lives and keep the economy afloat.

“With a manageable debt profile, a steady revenue stream brought about by tax reform, and the continued practice of fiscal prudence, the government is confident it will not run out of resources in waging the protracted battle against the COVID-19 crisis,” Dominguez said.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno also welcomed the rating decision by R&I, noting that the Philippines has again earned an important vote of confidence on its ability to bounce back from the COVID-19 crisis.

“With the recent surge in COVID-19 cases, the tail-end of the crisis is proving to be extra challenging. Nevertheless, we do not see a permanent dent on our macroeconomic fundamentals, and we can head back to our growth path post-COVID,” Diokno said.

The central bank chief said that inflation, although seen to slightly breach the target range this year, will ease to within the 2.0 percent to 4.0 target band next year. 

Moreover, Diokno said the banking sector, although not totally unscathed, has kept the impact of the crisis manageable and remains well capable of helping support economic recovery and growth through credit. 

“The favorable inflation outlook and stable banking system, plus the speed of financial digitalization happening in the economy, are good reasons to be confident about the Philippines' medium and long-term growth prospects,” Diokno said.

R&I positively viewed the increase in government spending and budget deficit in light of the COVID-19 pandemic, noting that the country’s fiscal situation remains manageable.