Japanese credit rating agency Rating and Investment Information, Inc. (R&I) expects Philippine economic growth to lag behind its 2025 pace as the country continues to bear the brunt of corruption-led infrastructure spending delays in 2026.

This projection comes even as R&I affirmed the sovereign’s “A-” investment-grade credit rating with a “stable” outlook—a move signaling confidence in the country’s stable banking sector, manageable external debt, and medium-term fiscal trajectory despite domestic headwinds.

“R&I views the disruption stemming from the series of corruption issues as temporary and believes that the thorough implementation of preventive measures will lead to improved governance through greater transparency in budget execution and infrastructure projects,” the agency said.

Growth has logged successive slowdowns following the eruption of the flood control controversy in the second half of 2025, averaging 4.4 percent for that year before dropping to a post-pandemic low of 2.3 percent in the second quarter of 2026.

However, R&I expects growth to rebound to the five percent level as budget execution normalizes.

The rating agency noted that delays in infrastructure budget execution stem primarily from enhanced safeguards, including stricter project planning and progress monitoring. These stringent checks temporarily choked public investments, prompting the government to lower its 2026 growth target to 3.5 percent to 4.5 percent.

The bottleneck has also strained the balance sheet. National government debt climbed to 63.2 percent of GDP in 2025 on the back of higher borrowing needs alongside muted growth.

Nonetheless, R&I assured that “although the debt ratio has risen, it remains at a manageable level,” adding that the ratio should decline over the medium term as tax reforms help narrow the fiscal deficit.

Finance Secretary Frederick D. Go welcomed the rating affirmation, noting it recognizes the administration's fiscal consolidation efforts and economic reforms.

“This reinforces confidence, supports access to better financing, and helps attract quality investments that create jobs and expand economic opportunities for Filipinos,” Go said in an Aug. 21 statement.

The DOF added that the Marcos Jr. administration will leverage the positive assessment to “continue to strengthen revenue mobilization, improve public spending efficiency, manage debt prudently, and advance reforms that support investment-led, inclusive growth.”

The Bangko Sentral ng Pilipinas (BSP) also praised the rating action, noting it confirms the country's macroeconomic fundamentals remain intact despite global headwinds.

“The country’s resilience is supported by a sound banking system, an efficient payments system, and a healthy external position,” the BSP stated, reiterating its commitment to keeping inflation near its three percent target to protect household purchasing power and drive investment. The central bank emphasized it will maintain a “forward-looking and data-driven approach to monetary policy, financial supervision, payments oversight, and external sector management.”