NextGen Day

The main justification given by Japan Credit Rating Agency, Ltd. (JCR) for maintaining the Philippines’ A-level credit rating is the country’s macroeconomic fundamentals’ ongoing development in the face of a difficult global climate.

The Department of Finance (DOF) cited a report issued by JCR on March 10 in stating that the credit rating agency likewise upheld the ‘Stable’ outlook on the country’s credit rating despite the risks presented by the elevated inflation rate and global economic uncertainty.

A nation with lower credit risk and easier access to low-interest foreign finance is one that has an A-level investment grade rating with a stable outlook.

It added in a statement on Friday that the confirmation “confirms the country’s solid macroeconomic fundamentals, as indicated by the high growth performance in 2022 at 7.6 percent that exceeded the 6.5-7.5 percent growth assumption of the Development Budget Coordination Committee (DBCC)”.

The DOF said that because the domestic banking system is “healthy on greater payment capacity and improving employment scenario,” the credit rater also noted its resilience.

The country’s most recent credit rating action, it was stated, supports the improvement in the domestic labor and employment situation, which was further seen in January of last year when the jobless rate dropped to 4.8 percent.

While it only reached 60.9% of GDP in 2022, the national government’s outstanding debt was lower than the aim of 61.8% of the economy’s production (GDP).

The government’s budget deficit dropped from 8.6% of GDP the previous year to 7.3 percent last year.

The Marcos administration’s goal to “keep good macroeconomic fundamentals and achieve its budgetary targets by continuing the course of sound fiscal management” was repeated by Finance Secretary Benjamin Diokno.

According to him, recent structural reforms have made it possible for the nation to absorb pandemic shocks and chart a course for recovery.

One example is that the government has adopted a whole-of-government strategy to combat the high rate of inflation by not solely relying on the Bangko Sentral ng Pilipinas’ (BSP) rate hike decisions and instead has adopted measures to address supply issues with a number of food items and lessen the impact of higher rates of price increases on the lives of many Filipinos.

The government will direct the nation toward a path that fosters inclusive growth, offers equitable opportunities to Filipinos, and enables people to engage in a cutting-edge and globally competitive economy, according to the DOF’s Philippine Development Plan (PDP) 2023–2028.

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