Global debt watchers Moody’s Ratings and Fitch Ratings have “verbally” affirmed their investment-grade credit outlook for the Philippines, even as the country has been flooded with cases tied to alleged corruption in public infrastructure funds.

Department of Budget and Management (DBM) Undersecretary and Principal Economist Joselito R. Basilio told reporters on the sidelines of the DBM’s 2025 Fiscal Policy Conference that both credit rating agencies sounded more optimistic than the local sentiment.

“Both debt watchers verbally affirmed their credit outlook for the Philippines. They know that the domestic economy is resilient,” Basilio told reporters on Monday, Oct. 27.

“Fitch knows the positive side—that this will only improve the way we do things, that this will result in reform,” he added.

It can be recalled that S&P Global Ratings recently held back from raising by a notch its ‘BBB+’ investment-grade sovereign credit rating for the Philippines because the country was caught in the middle of the flood control mess.

According to Basilio, both Fitch and Moody’s had several inquiries on national matters involving governance in infrastructure fund spending, but this was tempered by the outlook that the fiasco would lead to enhanced government processes.

“They did not say that all these developments will impact growth,” Basilio noted. Fitch earlier retained its 2025 gross domestic product (GDP) growth forecast for the Philippines at 5.6 percent. If realized, economic growth would fall within the government’s downscaled target of 5.5 to 6.5 percent for this year.

Basilio was among the Philippine economic officials, alongside National Treasurer Sharon P. Almanza, who met with Moody’s and Fitch on the sidelines of the World Bank (WB)-International Monetary Fund (IMF) annual meetings in the United States (US) this month.

To date, the Philippines’ sovereign credit is rated ‘BBB’ with a ‘stable’ outlook by Fitch, ‘BAA2’ with a ‘stable’ outlook by Moody’s, and ‘BBB+’ by S&P Global.

Meanwhile, the government remains in pursuit of fiscal consolidation, as Basilio asserted that funds pulled out of flood control infrastructure projects could be reallocated to soft infrastructure.

“Even if the flood control infrastructure projects are removed, the funds will be redirected to soft infrastructure such as hospitals and regional health centers. So, it will actually improve the achievement of growth targets because there will be greater efficiency in spending,” Basilio said.

“Also, we’ll be focusing more on projects with higher multipliers, because we’ve seen that flood control projects have a relatively small multiplier effect since much of the spending ends up going to private construction projects.”

DBM Assistant Secretary Romeo Matthew T. Balanquit also told reporters that the government remains on track to achieve a fiscal deficit equivalent to 5.5 percent of GDP this year, noting that ₱157 billion in underspending occurred in the third quarter due to corruption cases.

Balanquit, however, believes that government spending will pick up in the fourth quarter. “We will be able to fast-track or have more spending because we have many items on the wait list where funds could be reallocated,” he said.