The Japan Credit Rating Agency Ltd. (JCR) has reaffirmed the Philippines’ long-term foreign and local currency issuer ratings at “A-” with a stable outlook, underscoring the country’s robust macroeconomic fundamentals and fiscal resilience.
JCR said the affirmation reflects the agency’s confidence in the Philippines’ sustained economic growth, solid external position and effective fiscal management.
The stable outlook indicates the rating is unlikely to change in the next 12 to 24 months, barring significant economic shifts, the Tokyo-based JCR said in a report.
While JCR has affirmed the Philippine rating at “A-”, other major credit rating agencies have maintained the country’s investment-grade status at slightly lower levels. Fitch Ratings, for instance, affirmed the Philippines’ credit rating at “BBB” with a stable outlook, citing strong medium-term growth prospects.
While both are within the investment-grade category, “A-” generally indicates a stronger creditworthiness than “BBB.” JCR’s “A-” signifies a stable and positive outlook for the Philippines, while Fitch’s “BBB” rating reflects a stable outlook but still indicates a lower risk profile.
The country’s high and sustained economic growth is supported by solid domestic demand, low-level external debt and resilience to external shocks, as well as its accumulated foreign exchange reserves, JCR noted.
JCR expects the Philippines’ economic growth and fiscal improvement through government efforts will enhance the country’s creditworthiness.
Fiscal consolidation
The government’s commitment to fiscal consolidation under the Medium-Term Fiscal Framework has been instrumental in maintaining fiscal stability, JCR said.
This year the agency estimates real gross domestic product (GDP) growth to stay in the upper 5 percent range, supported by domestic demand despite uncertainties in the external environment.
The Philippine economy grew 5.4 percent in the first quarter of 2025, slowing from a pace of 5.9 percent a year earlier, but still outperformed other economies in Asia, except China and Vietnam, official data showed.
Efforts to reduce the debt-to-GDP ratio and manage the budget deficit have been viewed positively by JCR, and the agency also acknowledges the country’s healthy banking system and ongoing structural reforms aimed at enhancing economic competitiveness.
FX liquidity position
Despite increased uncertainty due to changes in US tariff policies, JCR said the Philippines’ foreign exchange liquidity position remains strong and expects the economy to retain high resilience to external shocks going forward.
However, JCR said reducing income disparity through rural development and infrastructure development remains an important task for the country to address.
JCR chief analyst Atsushi Masuda and senior analyst Shinya Iwasaki said the agency expects the country’s “economic growth and fiscal improvement through the government’s efforts will enhance the country’s creditworthiness.”
Japan a ‘most important partner’
“JCR’s affirmation will support and strengthen investment from Japan, one of the Philippines’ most important partners,” Bangko Sentral Gov. Eli Remolona Jr. said in a separate statement.
The central bank will continue to safeguard price and financial stability to boost the country’s resilience amid global headwinds, he said.
Ample reserves
JCR also cited the country’s strong external position and ample foreign exchange reserves, as well as government efforts towards fiscal consolidation under the Medium-Term Fiscal Framework.
As of end-April 2025, BSP data showed the Philippines’ gross international reserves stood at $105.3 billion, sufficient to cover 7.3 months of imports and 3.6 times of short-term external debt based on residual maturity.
The “A-” rating from JCR is “very good news,” Finance Secretary Ralph Recto said, “which means credit rating agencies have strong confidence in our country.”
“We remain committed to securing more ‘A’ ratings by staying faithful to our fiscal consolidation plan and Road-to-A strategy,” he added.
Economic measures enacted by the administration of President Ferdinand Marcos Jr. have strengthened the tax regime and improved the overall investment climate in the country, JCR said.
These measures include the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which enhances the ease of doing business.
It clarifies the scope of value-added tax (VAT), while rationalizing the VAT and excise tax refund system and streamlining income tax incentives.
Improved fundamentals
Michael Ricafort, RCBC’s chief economist, the first ever “A” credit rating by JCR during the pandemic in June 2020 signifies resilience and improved international investor confidence in the Philippines.
“This reflects the Philippines’ improved economic and credit fundamentals in recent years, as well as improvements in fiscal performance that could help attract more roster of international investments and international credit at much lower cost and with better terms for the country,” Ricafort said.
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the rating “is a strong vote of confidence in PH macroeconomic fundamentals.”
Despite global uncertainties and domestic challenges, the Philippines remains a resilient and creditworthy borrower with stable growth prospects, prudent fiscal management, and sound monetary policies, Rivera said.
“To sustain and improve this credit standing, the government must remain focused on fiscal discipline, infrastructure development, and structural reforms, especially in revenue generation and ease of doing business,” Rivera added.
