Moody’s maintains Philippines’ Baa2 rating, stable outlook

Moody’s Ratings has affirmed the Philippines’ Baa2 investment-grade credit rating and maintained its stable outlook, citing the resilience of the country’s economic fundamentals despite higher global energy costs and a temporary slowdown in public infrastructure spending.

The rating agency said the Philippines remains supported by strong access to domestic and international financing markets and adequate foreign exchange reserves, which should help the country withstand volatility in global capital flows. Moody’s also expects fiscal metrics to stabilize over the next two years as economic growth gradually recovers and the government continues its fiscal consolidation efforts.

The country’s economic managers hailed the affirmation as a reflection of the local economy’s resilience despite mounting external headwinds, including the global energy shock.

“We welcome the stable outlook credit-rating affirmation, even as the world deals with real headwinds. Moody’s assessment confirms our strong macroeconomic fundamentals, and that the reforms we’ve put in place are working,” Finance Secretary Frederick Go said.

“The rating decision recognizes the economy’s ability to withstand global economic headwinds,” Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said.

“On the part of the BSP, we will continue working to bring inflation back close to target, safeguard the soundness of the country’s banking system, promote a safe and efficient payments and settlements system, and prudently manage the country’s international reserves. These efforts help preserve macroeconomic and financial stability, which supports sustainable and inclusive growth,” he added.

An investment-grade rating from firms such as Moody’s signals relatively low credit risk, helping the government access financing at lower costs.

Last Friday, Japan-based Rating and Investment Information, Inc. (R&I) likewise affirmed its A- investment-grade credit rating and stable outlook for the Philippines, citing the country’s resilient economic fundamentals and improving fiscal position.

Both Go and Remolona earlier welcomed the affirmation as a move expected to boost investor confidence, which the BSP has reported remains subdued in light of the Middle East conflict and infrastructure scandal.

Moody’s also cited economic reforms implemented by the administration, including the CREATE MORE Act, the liberalization of sectors such as renewable energy, and efforts to increase private-sector participation. These measures are expected to support higher investment and productivity over time.

On fiscal management, Moody’s said the government’s consolidation efforts remain broadly on track. The agency projects the fiscal deficit to narrow to 3.9 percent of GDP in 2026, from 4.3 percent in 2024.

The rating agency also recognized the Bureau of the Treasury’s proactive liability management strategy, including efforts to lengthen debt maturities and maintain a debt portfolio that is predominantly fixed-rate and denominated in local currency. These measures help shield the government from refinancing pressures and fluctuations in interest rates.