Government vows to keep fiscal consolidation on track
The government vowed to keep fiscal consolidation and monetary stability on track after Moody’s Ratings retained the Philippines’ investment-grade credit rating, as economic managers sought to reinforce confidence.
Manila, Philippines — The Philippine government pledged to maintain fiscal consolidation and monetary stability despite receiving a rating affirmation from Moody's. Finance Secretary Frederick Go highlighted the resilience of the country's underlying economic fundamentals, stating that the rating reaffirmed the effectiveness of implemented reforms.
Moody's maintains the Philippines just above the minimum investment-grade level, projecting stabilization of fiscal metrics over the next two years as recovery in economic growth continues. However, the rating agency identified challenges such as weakening debt affordability, institutional constraints, low income levels, and high exposure to climate risks as ongoing credit concerns.
Economic growth is expected to slow to around 3.6 percent this year, before recovering to approximately 5.3 percent in 2027, due to higher food and energy prices and reduced public investment. The Department of Finance acknowledged these challenges and emphasized the administration's commitment to strengthening revenue mobilization, improving public spending efficiency, and advancing reforms to bolster private investment.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) reiterated its focus on preserving macroeconomic and financial stability by targeting inflation, safeguarding the banking system, and managing international reserves. Despite the affirmation, Moody's cautioned that risks could escalate if the economic slowdown persists, fiscal consolidation falters, or political developments preceding the 2028 elections impede reforms and revenue measures.
For the rating to move upward, sustained fiscal consolidation is required, coupled with stronger growth fueled by private investment and productivity gains. In contrast, continued deterioration in fiscal and debt metrics, slower medium-term growth, or a halt in reforms could exert downward pressure on the rating.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
