Philippines’ resilience amid pandemic secures A- credit rating from Japan

HSBC Philippines
Philippines' A- credit rating from Japan
The Philippines received its stable outlook from Japan Credit Rating Agency. Image from BCDA Group Facebook.

The Philippines has secured A- credit rating from Japan Credit Rating Agency (JCR Agency), an upgrade from the previous BBB+ after citing the country’s resilience.

The Japanese agency cited the country’s withstanding the effects of the coronavirus pandemic that has slowed down growth, impaired fiscal positions, and hurt credit ratings of economies across the globe.

JCR assigned a “stable” outlook on the new rating, which indicates that the “A-” will be maintained over the near term.

JCR said its decision to raise the Philippines’ credit rating came on the back of its assessment that the impact of the COVID-19 crisis on the domestic economy and the government’s fiscal standing will be temporary, given the country’s strong fundamentals going into the crisis, the massive relief measures, as well as the pursuit of important legislation, such as the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) under the Comprehensive Tax Reform Program (CTRP).

“JCR holds that a downturn will be limited given the country’s strengthened economic base, resilient external position, and the government’s economic stimulus package totaling more than 9 percent of GDP. JCR also considers that the fiscal soundness will not be impaired because while the fiscal deficit may widen, the package at this time is justifiable and the government debt will remain comparatively subdued,” JCR said last June 11, 2020.

JCR expects the Philippine economy to bounce back with a growth rate anywhere between 6 and 7 percent in the medium term following an anticipated contraction this year due to the effects of COVID-19.

Fitch had earlier affirmed the “BBB” rating it gave to the Philippines in 2019 while S&P Global affirmed the country’s “BBB+” it issued also in 2019.

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