Despite the difficulty involved, the Department of Finance (DOF) remains optimistic that the Philippines would achieve the coveted "A" credit rating once the necessary structural reforms are put into effect by the Marcos administration.

During the Post-SONA Philippine Economic Briefing on Tuesday, July 25, Finance Secretary Benjamin E. Diokno acknowledged the significant challenge of achieving an "A" credit rating from the three major international credit rating agencies.

Currently, the Philippines falls short of the “A” rating across all major credit watchers, with Moody's Investors Service rating the country at “Baa2” and S&P Global Ratings at “BBB+.”

Moody’s and S&P Global have assigned a "stable outlook," indicating a projection of no rating changes for the country in the next 12 to 18 months.

In contrast, Fitch Ratings has assigned a “BBB” rating to the Philippines with a negative outlook, implying that the country may face a downgrade if economic conditions worsen in the upcoming months.

“I think it's much more difficult to get an ‘A' upgrade from ‘BBB+.’ But that is still our goal. Our goal is still to what we call ‘Road to A’ and so we expect to have that ‘A’ rating before the end of the President's term,” Diokno said.

The credit rating is like a report card that debt-watchers give to countries, like the Philippines, to judge their ability to handle their debts and financial responsibilities.

An "A" credit rating is like getting an excellent grade, meaning the Philippines is seen as a trustworthy borrower with a low risk of not being able to pay back its debts.

Moreover, having an "A" credit rating will make the Philippines attractive to people and organizations who want to invest or lend money because they see the country as a safe and reliable place to put their funds.

But Diokno clarified that despite the country's current "BBB" rating, there is no skepticism among debt watchers regarding the government's ability to service its debt.

Diokno explained that the expectations of the three credit agencies revolve around the Marcos government implementing further structural reforms as a means to meet their criteria for “A”.

For this reason, the finance chief believes that by enacting reforms like military pension reform, bureaucracy streamlining, and additional tax reforms, the Philippines will fulfill the requirements for attaining an "A" rating.

The Marcos administration is currently in the process of drafting a bill aimed at reforming the pension system for military and uniformed personnel.

Alongside this effort, the government also wants to implement a rightsizing program within the national government to enhance the efficiency of public service delivery.

Furthermore, the government is actively pursuing several tax reform initiatives.

These include proposals to impose an excise tax on single-use plastics, apply value-added tax to digital services, rationalize the fiscal regime for mining, and reform the motor vehicle user's charge.

Additionally, the DOF is pushing for an increase in sin tax rates specifically targeting sugary beverages.