Debt-watcher Fitch Ratings has revised the credit rating outlook of the Philippines to stable from negative due to the “improved confidence” that the country is returning to a strong growth path following the prolonged pandemic. At the same time, the Philippines’ investment-grade credit rating has been retained by Fitch at ‘BBB’, which is one notch above the minimum investment grade. 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 revision of the Outlook to Stable reflects Fitch's improved confidence that the Philippines is returning to strong medium-term growth after the Covid-19 pandemic, supporting sustained reductions in government debt/GDP [gross domestic product], after substantial increases in recent years,” Fitch said. “The revision also reflects our assessment that the Philippines' economic policy framework remains sound and in line with 'BBB' peers, despite its low scores on World Bank Governance indicators,” it added. The revision comes despite some relative deterioration over the last years in credit metrics that previously had been strengths, including government debt to GDP and net external debt to GDP. “We forecast real GDP growth of above six percent over the medium term, considerably stronger than the 'BBB' median of three percent, after a record outturn of 7.6 percent in 2022, reflecting normalization of activity after the pandemic and the government's investment program,” Fitch said. The country’s economy moderated to 6.6 percent in the first three-months of the year, with the post-pandemic recovery boost fading. “Ongoing reforms to the business environment and investment regulations create upside potential for growth,” Fitch said. Meanwhile, Finance Secretary Benjamin E. Diokno said the improved outlook 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. “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 said in a statement. He stressed that the government's 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," Diokno said. "The full implementation of the six-year Medium-Term Fiscal Framework will support these investments while promoting fiscal sustainability,” he concluded.