Japan credit watcher affirms Philippines rating

MANILA, Philippines —  The Japan Credit Rating Agency (JCR) has affirmed its A- rating on the Philippines, citing the country’s sustained high economic growth, robust domestic demand and low external debt levels as key factors behind the stable outlook.

In its latest assessment, JCR said the ratings also reflect the Philippines’ resilience to external shocks, underscored by substantial foreign exchange reserves.

The agency also commended the Marcos administration’s fiscal consolidation and infrastructure development efforts, which have shown steady progress.

“JCR expects that economic growth and fiscal improvement through the government’s efforts will enhance the country’s creditworthiness. It will continue to monitor developments closely,” the debt watcher said.

The country’s gross domestic product (GDP) grew by 5.4 percent in the first quarter,  slightly higher than the 5.3 percent expansion in the previous quarter, driven by strong household consumption.

However, despite the country’s strong economic fundamentals, JCR said that addressing income disparity, especially through rural development and infrastructure investment, remains a significant challenge.

JCR projects the Philippine economy will maintain growth in the upper five percent range in 2025, supported by robust domestic demand despite external uncertainties.

The Marcos administration’s “Build Better More” program, which aims to boost infrastructure spending to five to six percent of GDP annually, is expected to remain a key growth driver.

The Philippines has also made strides in strengthening its fiscal position. JCR noted that in 2024, the fiscal deficit narrowed to 5.7 percent of GDP, reflecting improvements in the primary fiscal balance despite increased interest payments.

“The government debt to GDP ratio stood at approximately 60 percent at end-2024, which is one of the lowest among sovereigns rated in A-range by JCR,” the credit rater said.

The country’s external position also remained stable, JCR said. External debt remains manageable at 29.8 percent of GDP and the Philippines’ foreign exchange reserves stood at $106.3 billion at the end of 2024, providing a solid buffer against external volatility

“Despite increased uncertainty due to changes in US tariff policies, the Philippines’ foreign exchange liquidity position remains solid, and JCR expects the economy to retain high resilience to external shocks going forward,” it added.

The Bangko Sentral ng Pilipinas (BSP) welcomed the latest credit rating affirmation, saying that an investment-grade rating signals low credit risk and favorable financing terms for critical public services and infrastructure.

“JCR’s affirmation will support and strengthen investment from Japan, one of the Philippines’ most important partners,” BSP Governor Eli Remolona Jr. said.

The BSP will continue to safeguard price and financial stability to boost the country’s resilience amid global headwinds,” Remolona said.

In April, Fitch Ratings also affirmed its ‘BBB’ rating with a stable outlook for the Philippines, citing easing inflation, sound monetary policy and stable public debt as key factors.