Moody’s affirms Phl credit strength, BSP hails stable outlook

The Bangko Sentral ng Pilipinas (BSP) on Saturday welcomed the favorable assessment of the Philippine economy by global credit watcher Moody’s Ratings, which highlighted the country’s strong access to external financing and ample reserves that help shield it from global financial volatility.

Moody’s, in its latest periodic review completed on 21 August, reaffirmed the Philippines’ Baa2 rating with a stable outlook. The assessment cited the country’s “strong access to domestic and international funding markets” as well as its “ample foreign-currency reserves” that provide a buffer against swings in global capital flows.

As of end-July 2025, the country’s gross international reserves stood at US$105.4 billion, enough to cover 7.2 months of imports and equivalent to 3.4 times the country’s short-term external debt based on residual maturity.

“The Philippines has built ample reserves and policy space to absorb external shocks, allowing us to maintain stability even in times of global uncertainty,” BSP Governor Eli Remolona Jr. said, underscoring the significance of this external position.

Moody’s noted that the Philippines continues to outperform regional peers in terms of growth. Gross domestic product (GDP) expanded 5.4 percent year-on-year in the first half of 2025, in line with its full-year forecast of 5.7 percent, which falls within the government’s 5.5 to 6.5 percent target range.

This expansion was supported by resilient household consumption, steady overseas Filipino (OF) remittances — which reached $16.75 billion in the first half of 2025, up 3.1 percent year-on-year — and ongoing public investment. Moody’s also credited ongoing structural reforms and fiscal consolidation efforts, which aim to bring down the budget deficit to 4.3 percent of GDP by 2028 under the Medium-Term Fiscal Framework.

At the same time, Moody’s cautioned about several downside risks, including elevated government borrowing costs despite central bank rate cuts, exposure to climate-related shocks, and global trade uncertainties, particularly stemming from US tariff policies.

Still, the stable outlook reflects a balance of risks at the current rating level. Moody’s noted that structural reforms and investments could accelerate growth and improve fiscal performance, while setbacks in deficit reduction or geopolitical tensions could weigh on the country’s economic standing.

For the Philippines, an investment-grade rating is crucial as it signals low credit risk, reducing borrowing costs for both government and private sector entities. This, in turn, allows more fiscal space for socially beneficial programs and infrastructure projects.