The Department of Finance (DOF) welcomed the recent assessment by international credit evaluator Moody’s Ratings as an “optimistic assessment of the Philippines’ growth potential as a result of the structural reforms” undertaken by the government.
In a statement released Tuesday, Finance Secretary Frederick Go described the firm’s evaluation as a sign that the economy is on track for recovery.
“Moody’s assessment affirms that the Philippines is on the right track. We will continue to uphold fiscal discipline, accelerate strategic investments, and fast-track reforms toward sustainable growth,” Go said.
Published last week, Moody’s upheld its Baa2 credit rating for the country, placing it at the lower end of the investment-grade scale. While the rating indicates moderate credit risk and an adequate capacity to meet financial obligations, it also suggests the Philippines is more vulnerable to economic downturns than A-rated borrowers. The Baa2 rating signals sensitivity to shocks but overall stability under normal conditions.
The DOF added that Moody’s reaffirmation of the rating is “supported by strong access to domestic and international funding markets, a stable banking system, and ample foreign currency reserves to cushion the impact of global market volatility.”
The Bangko Sentral ng Pilipinas (BSP) reported in late January that 87.7 percent of banks expect to keep their credit standards unchanged in the first quarter of 2026, indicating stability in the banking sector. Bank lending likewise held steady at the end of 2025.
Gross international reserves rose to $112.5 billion in January 2026, up $1.681 billion from the previous month. This marks the second-highest level on record, covering about 7.5 months’ worth of imports and 4.1 times the country’s short-term external debt based on residual maturity.
The DOF said Moody’s is also “confident that the Philippines will maintain resilient economic growth compared to its regional and rating peers.” The firm projects GDP growth to reach 5.5 percent in 2026 — 1.1 percentage points higher than 2025’s growth rate and within the government’s 5 to 6 percent target range — driven by strong household consumption, overseas remittances, accelerated public investment, and ongoing structural reforms.
The Moody’s report also noted that fiscal consolidation remains on track, with the deficit projected to narrow from 5.6 percent of GDP in 2025 to 4.3 percent by 2028.
“Despite external challenges, the government’s policy and fiscal management remain relatively strong,” the DOF said.
“To protect the country’s credit standing, Moody’s recommends sustaining reforms that have strengthened the economy, noting that a steady flow of public and private investments could also help growth exceed expectations.”