MANILA - Moody’s Investors Service has affirmed the Philippines’ credit rating of “Baa2” with a “stable” outlook, the Bangko Sentral ng Pilipinas said Thursday.
Baa2 is one notch above minimum investment grade, while the stable outlook means neither an upgrade nor downgrade is forthcoming.
Last May, Fitch Ratings and S&P Global also affirmed the country’s BBB and BBB+ ratings, respectively, both with a stable outlook.
The BSP said the rating was a vote of confidence on the ability of the economy to cushion the effects of COVID-19 and to post a solid recovery over the near term.
The central bank noted that the affirmation of the Philippines' credit rating comes amid a series of credit rating downgrades and negative outlook revisions by Moody’s worldwide.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Philippines entered the COVID-19 crisis in a position of strength, with healthy external accounts, sound and stable banking system, and manageable inflation.
“Complementing these buffers are the prompt, decisive, and extraordinary measures implemented by the BSP and the National Government to save lives and livelihoods, and to make sure we emerge from this crisis stronger than before,” Diokno said.
Moody’s said the improvement of the government’s fiscal position in recent years provides a buffer against a rise in public indebtedness due to shocks such as the COVID-19 pandemic.
“Relatedly, the track record of prudent economic and fiscal management, and a robust banking system, contribute to the stable access to funding at moderate costs and support prospects for fiscal consolidation and debt stabilization after the shock subsides,” Moody’s said.
Finance Secretary Carlos Dominguez III said the country has “ample buffers” to cushion the fallout from COVID-19 while keeping debt levels manageable and without compromising fiscal health.
"On the back of such strong fundamentals, the Duterte administration is committed to a calibrated reopening of the domestic economy in order to quickly restore business and consumer confidence while holding on to certain mobility restrictions and strict health protocols meant to further slow COVID-19 spread, save lives and protect communities," he added.
Moody’s projects the Philippine economy to contract by 4.5 percent this year due to the disruptions from the pandemic. But the debt watcher expects the economy to rebound with a 6.5 percent growth in 2021, followed by 6 percent in the succeeding years.
The recovery projection comes on the back of favorable demographics and improving investment climate, Moody’s said.