S&P keeps stable outlook for Philippines

MANILA, Philippines — S&P Global Ratings has maintained its investment grade rating and stable outlook for the Philippines as the country continues to recover from the pandemic-induced recession.

In a report, the debt watcher affirmed the country’s BBB+ credit rating or a notch below the A-scale as the economy starts to recover, and growth is expected to accelerate further in 2022 as the pace of COVID-19 vaccinations picks up and the pandemic becomes more contained.

“We affirmed the ratings because we believe the Philippines will continue to have good economic recovery prospects once the COVID-19 pandemic is contained, and that the government’s fiscal performance will strengthen accordingly,” S&P said.

It said the ratings reflect the Philippines’ above-average economic growth potential, which should drive constructive development outcomes and underpin broader credit metrics.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said  S&P’s decision to keep the country’s BBB+ credit rating underscored the view that the impact of the COVID-19 crisis on the economy would be transitory and that the Philippines continues to enjoy bright medium-term growth prospects.

“Prior to the pandemic, the Philippines was already on the verge of becoming an upper middle-income economy and had already posted significant strides in poverty reduction. We expect to go back to that trajectory soon, as vaccination rollout continues and as we push for vital economic reforms,” Diokno said.

Although the government’s fiscal and debt settings have deteriorated due to the economic fallout from the COVID-19 pandemic and the associated extraordinary policy responses, S&P said the Philippines long track record of fiscal prudence provided a buffer to key metrics.

“The ratings also benefit from the economy’s sound external settings. These factors are weighed against the Philippines’ low GDP per capita relative to other investment-grade sovereigns and evolving institutional settings,” it said.

Last March, S&P slashed the country’s 2021 gross domestic product (GDP) growth forecasts to 7.9 percent and to 7.2 percent next year. It also lowered the GDP growth forecast for 2023 to 7.2 percent.