Government vows to keep fiscal consolidation on track

MANILA, Philippines — The government vowed to keep fiscal consolidation and monetary stability on track after Moody’s Ratings retained the Philippines’ investment-grade credit rating, as economic managers sought to reinforce confidence.

Finance Secretary Frederick Go said yesterday the rating action reflected the resilience of the Philippine economy’s underlying fundamentals, with fiscal consolidation remaining broadly on track.

“We welcome the stable outlook credit-rating affirmation, even as the world deals with real headwinds. Moody’s assessment confirms our strong macroeconomic fundamentals, and that the reforms we’ve put in place are working,” Go said.

Moody’s kept the Philippines two notches above the minimum investment-grade level, citing expectations that the country’s fiscal metrics would stabilize over the next two years as economic growth gradually recovers and fiscal consolidation continues.

The rating agency, however, pointed to weakening debt affordability, institutional constraints, low-income levels and high exposure to climate risks as continuing credit challenges.

It also expects economic growth to slow sharply to around 3.6 percent this year before recovering to about 5.3 percent in 2027, with higher food and energy prices and weaker public investment weighing on near-term activity.

Against this backdrop, the Department of Finance said the Marcos administration would continue efforts to strengthen revenue mobilization and improve public spending efficiency while advancing reforms to support private investment.

The Bangko Sentral ng Pilipinas (BSP), for its part, said it would continue focusing on price and financial stability as part of efforts to preserve the country’s broader macroeconomic resilience.

“We will continue working to bring inflation back close to target, safeguard the soundness of the country’s banking system, promote a safe and efficient payments and settlements system and prudently manage the country’s international reserves,” BSP Governor Eli Remolona Jr. said.

“These efforts help preserve macroeconomic and financial stability, which supports sustainable and inclusive growth,” Remolona added.

Moody’s said the country’s external buffers remain a credit strength, with strong access to domestic and international funding markets and foreign exchange reserves sufficient to help the economy withstand volatile capital flows.

However, Moody’s cautioned that risks could increase if the economic slowdown persists, fiscal consolidation loses momentum or political developments ahead of the 2028 elections delay reforms and revenue measures.

It said upward pressure on the rating would require sustained fiscal consolidation that places government debt on a firm downward path, alongside stronger growth driven by private investment and productivity gains.

Conversely, persistent deterioration in fiscal and debt metrics, weaker medium-term growth or a stalling of reforms could put downward pressure on the rating.