Finance Secretary Ralph G. Recto emphasized that the recent affirmation of the Philippines' investment-grade credit rating by Japan Credit Rating Agency (JCR) will directly benefit ordinary Filipinos.

Recto said the favorable credit rating will free up funds from interest payments for increased development programs, such as additional infrastructure projects, enhanced social services, improved healthcare, and better education. 

On Tuesday, JCR’s reaffirmed the Philippines’ credit rating of “A-” with a stable outlook.

“This latest development is highly encouraging and shows that the fiscal and economic policies pursued by the Marcos, Jr. administration are on track to achieve a growth-enhancing fiscal consolidation,” Recto said in a statement.

“Having a high credit rating is a major win for all as this means that the Philippines can have more access to cheaper financing from our development partners and the international capital markets,” he added. 

A high credit rating reflects the Philippines’ creditworthiness, sending a signal of confidence to investors and creditors, resulting in lower interest rates and better returns for Philippine bonds.

“It also attracts more foreign direct investments into the country, which will create better employment opportunities for Filipinos,” he added. 

In its press release, JCR underscored the Philippines’ high and sustained economic growth, buoyed by strong domestic demand, resilience to external shocks due to its low external debt and substantial foreign exchange reserves, and a solid fiscal foundation as key credit strengths. 

In 2023, the Philippine economy expanded by 5.6 percent making it the fastest-growing economy in ASEAN.

The Japanese debt-watcher also noted that the country has one of the lowest government debt-to-gross domestic product (GDP) ratios among the sovereigns rated in the A-range, which reached 60.2 percwent at the end of 2023.

JCR is optimistic about the prospects of the Philippine economy, projecting it to further grow by about 6.0% in 2024, driven by the higher demand in the tourism sector, stronger private consumption fueled by moderate inflation, and higher remittance inflows from overseas Filipinos. 

Additionally, the credit rating agency highlighted the robustness of the country’s foreign currency liquidity position.

Moreover, it said the country’s economic growth will be driven by the Marcos, Jr. administration’s massive infrastructure program. Through the President’s Build Better More program, the government targets an annual infrastructure spending of 5 percent to 6 percent of GDP.

JCR likewise noted that the country’s first sovereign wealth fund--the Maharlika Investment Fund (MIF)--will support infrastructure investments in the country.

The credit rating agency believes that the Philippine government will maintain its fiscal soundness, noting that the fiscal consolidation efforts championed by the Marcos, Jr. administration are on track based on the Medium-Term Fiscal Framework (MTFF).