Japan’s R&I maintains Philippines credit rating

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August 22, 2026 | 12:00am

Despite slower 2026 growth

MANILA, Philippines — Japan-based Rating and Investment Information Inc. (R&I) has affirmed the Philippines’ A- credit rating with a stable outlook, but warned that economic growth could weaken further this year as delays in infrastructure spending and elevated energy prices weigh on domestic activity.

In a report, R&I said it maintained the Philippines’ foreign currency issuer rating at A- and its foreign currency short-term debt rating at a-1, citing the economy’s diversified industrial base, improving fiscal position, manageable external debt and a stable banking system.

However, the Japanese credit watcher expects economic expansion this year to come in below the 4.4-percent growth recorded in 2025.

“It is highly likely that economic growth in 2026 will fall below the previous year’s level,” R&I said.

The government expects gross domestic product (GDP) growth of between 3.5 and 4.5 percent this year.

R&I noted that Philippine growth, which had been relatively strong compared with other major Southeast Asian economies, slowed to 4.4 percent in 2025 as infrastructure spending weakened amid stricter validation and governance measures following corruption allegations involving flood control projects.

According to R&I, temporary delays in the implementation of the infrastructure budget have persisted into 2026 as the government pushes for greater accountability and more prudent use of public funds.

At the same time, higher energy prices stemming from continued tensions in the Middle East have raised living costs and kept household consumption somewhat subdued, even as remittances from overseas Filipino workers remained stable.

Still, R&I expects the slowdown caused by tighter safeguards on public infrastructure spending to be temporary.

The debt watcher said the measures could ultimately improve transparency in budget execution and public works.

R&I expects economic growth to recover to the five-percent range beginning in 2027 as government budget execution normalizes.

On the external front, R&I said the Philippines remains relatively resilient despite persistent current account deficits.

It noted that stable inflows from overseas Filipino remittances continue to provide support, while part of the trade deficit reflects imports of raw materials and intermediate goods used for infrastructure and other investments.

The rating agency said this means the current account deficit does not necessarily weaken the country’s creditworthiness, particularly given adequate foreign exchange reserves and a relatively low net external debt position.

“External risk is limited,” the agency said.

R&I also expects the government’s fiscal position to improve gradually as authorities pursue consolidation while maintaining spending on infrastructure and social services.

The government also continues to meet most of its financing requirements through the domestic bond market while retaining access to foreign funding sources.

R&I said the country maintains a degree of debt affordability given its manageable interest payment burden.

“R&I’s affirmation of the Philippines’ A- rating and stable outlook recognizes the government’s fiscal consolidation efforts and the strength of our economic reforms. This reinforces confidence, supports access to better financing and helps attract quality investments that create jobs and expand economic opportunities for Filipinos,” Secretary Frederick Go said in a statement.

The Department of Finance said the government will continue to strengthen revenue mobilization, improve public spending efficiency, manage debt prudently and advance economic reforms that support inclusive growth.

Meanwhile, the Bangko Sentral ng Pilipinas (BSP) welcomed R&I’s affirmation, saying it reflects the country’s sound macroeconomic fundamentals despite lingering global uncertainties.