​Credit rating agency Fitch Ratings has affirmed the Philippines’ “BBB” credit rating and maintained a “stable” outlook on the back of the country’s gradually declining debt and resilient economy.

A BBB sovereign credit rating is a notch above the minimum investment grade. The Philippines is a BBB rated country since December 2017. The stable outlook, meanwhile, was given by Fitch last May 22, an upgrade from the previous “negative” outlook.

In a statement late Saturday, Nov. 11, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. said Fitch continues to recognize “the work being done by the central bank to bring inflation back to within the target range.” 

“The BSP will remain data dependent in managing inflation expectations in an effort to avoid the second-round effects of supply shocks,” he said. 

The BSP said the Fitch decision to maintain current credit standing was based on the “strong medium-term growth prospects, gradually declining debt, macroeconomic stability, and sound economic policies.” 

Fitch still views the BSP’s inflation targeting framework and exchange rate regime as credible, said the BSP. 

The BSP’s Monetary Board has raised the policy rate by a total of 450 basis points to 6.5 percent, in a bid to contain price pressures and to bring inflation back to within the government’s target range of two percent to four percent. As of end-October this year, inflation is still above-target at 6.4 percent. 

Meanwhile, Fitch expects inflation to moderate to 3.5 percent by 2025, the same projection as the BSP’s. 

As for the performance of the local economy, Fitch sees the Philippines’ real gross domestic product growing above six percent over the medium term, supported by large infrastructure investments as well as trade and investment reforms. 

As of the third quarter this year, with the recovery in government spending, the country’s gross domestic product (GDP) grew by 5.9 percent, better than the second quarter’s 4.7 percent.

Furthermore, Fitch expects the country’s general government debt to decline to 54 percent of GDP in 2025 after peaking slightly above this level from 2023 to 2024. 

An investment-grade rating indicates lower credit risk, thus allowing a country to access funding at lower costs from development partners and international capital markets. This enables a country to channel funds that would have otherwise been allotted for interest payments to socially beneficial programs and projects.

“A ‘BBB’ rating indicates that expectations of default risk are currently low. It also means that the country’s current capacity for payment of financial commitments is considered adequate. Moreover, an assignment of a 'stable' outlook means Fitch is not likely to change its rating over a one- to two-year period,” said the BSP.