MANILA - Japanese debt watcher Rating and Investment Information Inc has affirmed the Philippines BBB+ rating with a "stable" outlook, signaling a vote of confidence on the country's economic recovery, the central bank said Friday.
“The Philippines once again earned an important vote of confidence on its ability to bounce back from the COVID-19 crisis, with R&I's affirmation of the country's BBB+ rating with a ‘stable’ outlook," central bank Governor Benjamin Diokno said in a statement.
A BBB+ rating is a notch away from the minimum A- rating, while a stable outlook indicates absence of factors that may cause the rating to change in the short term, the BSP said.
Despite its severe economic contraction in 2020 due to COVID-19, the Philippines is expected to recover through "aggressive public investment," as well as fiscal and monetary policies that have boosted growth for some time, R&I said.
Although the surge in COVID-19 cases is proving to be "extra challenging," it is unlikely to make a "permanent dent" on the country's macroeconomic fundamentals, Diokno said.
The Philippines' gross international reserves rose to $109.08 billion at the end of February, up by $410 million from January levels. Cash remittances have also defied pandemic forecasts, growing in February by 5.1 percent to $2.477 billion from $2.358 billion in the same month last year, data showed.
Although inflation remains transitorily elevated, it is expected to settle within the government target of 2 to 4 percent range next year, Diokno said. The banking sector has also kept the crisis impact “manageable,” he added.
In January, Finance Secretary Carlos Dominguez said the country's debt and budget deficit levels are also manageable and sustainable.
R&I has “apparently taken notice" of the country's strong macroeconomic fundamentals that have enabled the country to accelerate spending on urgent programs, Dominguez said.
The ratings firm also lauded the country's reform agenda. President Rodrigo Duterte earlier signed a measure lowering corporate income tax as well as a measure to help banks dispose of bad loans.
The Philippines is able to maintain other investment grade credit ratings despite a wave of negative rating actions globally due to the pandemic, the central bank said.