The closely-watched Japan Credit Rating Agency Ltd., or JCR, has kept the investment-grade of “A-” with a stable outlook on the economy.

The debt watcher highlighted the country’s high and sustained economic growth supported by solid domestic demand, resilience to external shocks with its low-level external debt and accumulated foreign exchange reserves, and its solid fiscal base as credit strengths.

An investment-grade rating indicates lower credit risk, thus allowing a country to access funding from development partners and international debt capital markets at lower cost. This enables the government to channel funds that would have otherwise been allotted for interest payments to socially beneficial programs and projects.

JCR observed that the government debt-to-gross domestic product, or GDP, ratio at the end of 2023 was approximately 60 percent, one of the lowest among the sovereigns rated in the A-range.

According to the Philippine Statistics Authority, the economy grew by 5.6 percent in 2023, surpassing major economies in Asia that have officially released their full year 2023 GDP figures, such as China with its GDP at 5.2 percent, Indonesia at 5.1 percent, Vietnam at 5.1 percent, Malaysia at 3.7 percent, and Thailand at 1.9 percent.

JCR said it expects the country’s real GDP to expand by around 6.0 percent in 2024 supported by a recovery of external and tourism demand, as well as solid private consumption underpinned by a subdued rise in prices and stable flow of remittances from overseas Filipinos.

Robust liquidity

The credit rating agency also noted the robustness of the country’s foreign currency liquidity position.

Bangko Sentral ng Pilipinas or BSP Governor Eli Remolona Jr. welcomed JCR’s recognition and said, “Our external payments position will continue to remain manageable, supported by sustained foreign exchange inflows from Overseas Filipino remittances, business process outsourcing revenues, foreign direct investments, and tourism receipts. In addition, the country maintained ample foreign exchange reserves.”

BSP’s preliminary data indicate the country’s gross international reserves remain healthy at $103.3 billion as of end-January 2024. The figure represents a liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.

The credit rating agency said the government will maintain its fiscal soundness as the fiscal consolidation being promoted by the administration of President Ferdinand R. Marcos, Jr. is producing good results based on the medium-term fiscal framework.