Finance Secretary Benjamin Diokno said Tuesday the government will maintain its fiscal prudence to meet its financial obligations, following Moody’s Investors Service action reaffirming the Philippines’ investment grade rating of “Baa2”, with a stable outlook.
“We welcome Moody’s reaffirmation of its favorable rating and outlook for the Philippines. The Marcos administration will continue to exercise fiscal prudence to ensure sufficient funding for our programs, while meeting our financial obligations,” Diokno said.
Moody’s rating action was driven by the view that the challenging global credit conditions would not derail the country’s recovery from the pandemic.
Moody’s said the rebound in economic activity since mid-2021 has been strong and would be resilient to the challenges posed by the turn in global credit conditions over the near-term.
The Philippine economy was not also significantly exposed to Russia and was less dependent on external demand, compared to Asia-Pacific peers given its relatively large domestic market.
Moody’s also said that the government’s commitment to policy reforms would help assure gradual fiscal repair, following a reversal of the strengthening of the government’s fiscal and debt metrics resulting from the pandemic.
Moody’s cited the Marcos administration’s introduction of a medium-term fiscal framework as an assurance of gradual fiscal consolidation and debt stabilization.
The framework, which aims to reduce the fiscal deficit, promote fiscal sustainability, and enable robust economic growth, emphasizes broadening revenue generation and maintaining high infrastructure spending.
The Philippines also retains fundamental strengths in terms of the stability of the banking system and the capacity to meet external debt repayments, despite cyclical pressures on the balance of payments and consequent exchange rate depreciation.
Moody’s also reaffirmed the government’s foreign currency senior unsecured shelf rating at Baa2 and the senior unsecured ratings for the liabilities of the Bangko Sentral ng Pilipinas at Baa2.