DBM welcomes Ph improved outlook to stable, “BBB’ credit rating
This improved outlook signals the country’s creditworthiness and allows it to access funding from development partners and international capital markets at lower cost. This means that the Philippine credit conditions have already started to firm up its trajectory towards reducing its borrowing cost and likewise lowering its debt burden as percent of Gross Domestic Product (GDP).
A rating of “BBB” is above the minimum investment grade and indicates the risks of default are low. It is also a vote of confidence on the country’s ability to fulfill its financial commitments.
“Fitch’s improved outlook is a welcome development leading to the attainment of our fiscal consolidation goals and the achievement of more fiscal space for the government’s priority agenda and projects,” DBM Secretary Amenah F. Pangandaman said.
"This development indicates that the country's growth now stabilizes with continuous strong economic activities, and that we are determined to achieve a steady improvement in our growth guided by our Medium-Term Fiscal Framework," Sec. Pangandaman added.
The revision of the Outlook to Stable reflects Fitch’s improved confidence that the Philippines is returning to strong medium-term growth after the Covid-19 pandemic, supporting sustained reductions in government debt/GDP, after substantial increases in recent years. The report also said that the revision reflects Fitch's assessment that the Philippines’ economic policy framework remains sound and in line with ‘BBB’ peers.
“Fiscal conditions are already improving, leading to reduced government borrowing costs. In short, fiscal consolidation is already taking place at this point, early in the first year of President Ferdinand R. Marcos Jr.’s administration. We will continue to sustain our country’s productivity, consistent with our Medium-Term Fiscal Framework,” the secretary said.
Based on their published Outlook, Fitch stated: “We expect the general government (GG) deficit to narrow to 2.8% of GDP in 2023 and 2024, from an estimated 3.3% of GDP in 2022 and 4.6% of GDP in 2021. This is consistent with a narrowing of the budgetary central government (CG) deficit to 5.7% of GDP by 2024, from 7.3% of GDP in 2022 and 8.6% of GDP in 2021. The gradual pace of consolidation reflects the authorities’ focus on fostering economic growth and development." (DBM/PIA Caraga)
