One of President Marcos’ economic managers has said that an “A” credit rating from Moody’s Ratings is now within reach, as the government intensifies its efforts to achieve this coveted status.

Although Moody’s has still kept the Philippines’ credit rating at “Baa2”—an investment-grade rating that signifies moderate credit risk—Budget Secretary Amenah F. Pangandaman is confident that the Marcos administration is on track with its “Road to A Credit Rating Agenda.”

"I am confident that as long as we stay on track with our Agenda for Prosperity, with our whole-of-government approach, we will achieve an ‘A’ rating with Moody’s under this administration,” Pangandaman said in a statement.

The budget chief comments align with Finance Secretary Ralph G. Recto’s earlier assertion that achieving an “A” rating is feasible with any of the three major international credit rating agencies—Moody’s, Fitch Ratings, and S&P Global Ratings.

Currently, Fitch rates the Philippines at “BBB,” while S&P has assigned a rating of “BBB+.” All three agencies have also given the country a “stable” rating outlook.

READ: Moody’s retains Philippines’ credit rating: No upgrade. Here’s why

Acing ‘A’ not easy

But how close is the Philippines to securing the highly sought-after minimum “A” credit rating?

Among the three major rating agencies, S&P has assigned the Philippines the highest score, just a notch below the minimum “A-,” while Moody’s and Fitch have given the country the minimum investment grade.

However, achieving an upgrade is more complex than it seems, as rating agencies typically follow a structured process. Before taking any rating action, they first adjust their outlook to “negative,” “stable,” or “positive.”

A “negative” outlook suggests a potential downgrade in the near term, a “stable” outlook indicates no change, and a “positive” outlook signals an impending upgrade. However, there have been instances where rating agencies have upgraded ratings without prior adjustments.

For the Philippines to reach the minimum “A-” credit rating, both Moody’s and Fitch would need to upgrade the country’s rating twice, while S&P would need to upgrade it once.

Still a win for Filipinos

Despite not receiving an upgrade or a favorable outlook adjustment, Pangandaman and Recto said that Moody’s decision to affirm its investment grade rating for the Philippines is a victory for Filipinos.

Pangandaman said that the maintening the “Baa2” credit rating reflects the country’s ongoing reforms to liberalize the economy, its efforts towards fiscal consolidation, and its strong macroeconomic fundamentals.

“The passage of reforms over the past several years to liberalize the Philippine economy will support medium-term growth potential by supporting a business-friendly environment and attracting foreign investments,” she said.

Recto added that these investment-friendly reforms, along with the government’s continued commitment to fiscal discipline, have bolstered Moody’s confidence in the Philippines’ strong medium-term growth potential.

“Moody’s affirmation is another victory for Filipinos as this means greater access to more affordable financing to support our projects. These will create more quality jobs, increase incomes, and reduce poverty incidence in the country,” Recto said.

Since 2014, the Philippines has maintained a "Baa2" rating from Moody’s.

In its report last Friday, Moody’s said that an upgrade to the credit rating could occur if there are clear signs of rapid improvement in fiscal and government debt metrics after the pandemic, along with sustained economic growth.