Moody’s Ratings affirmed the Philippines’ Baa2 sovereign credit rating on Monday, citing expectations that the government’s fiscal position will stabilize over the next two years despite a sharp slowdown in economic growth.
The rating agency kept the outlook stable, saying the country’s credit strengths remain broadly balanced against deteriorating debt affordability, institutional constraints, low income levels, and high exposure to physical climate risks.
Moody’s expects a gradual recovery in economic growth from the current cyclical slowdown, supported by continued fiscal consolidation. Strong access to domestic and international capital markets, along with adequate foreign-currency reserves, also provides the Philippines with buffers against volatility in global capital flows.
The rating action comes as near-term growth has weakened substantially. Higher food and energy costs following the Middle East conflict have squeezed consumers, while public investment has been slow to recover following the flood-control probe.
Business sentiment has also remained cautious amid elevated prices and uncertainty, limiting private investment and weighing on economic activity.
The Bangko Sentral ng Pilipinas welcomed the affirmation, saying the decision recognizes the economy’s ability to withstand global headwinds.
The central bank said it would continue working to bring inflation close to target, safeguard the banking system, promote safe and efficient payment and settlement systems, and prudently manage the country’s international reserves.
“These efforts help preserve macroeconomic and financial stability, which supports sustainable and inclusive growth,” the BSP said.
Moody’s said the stable outlook reflects balanced risks at the Baa2 level. While the Philippines’ medium-term growth potential and credit fundamentals support the rating, the agency warned that a prolonged slowdown could weaken the credit profile.
Other risks include pre-election spending pressures ahead of the 2028 elections, slower reform momentum, and a deterioration in debt affordability beyond baseline expectations.
Moody’s also affirmed the government’s foreign-currency senior unsecured shelf rating at (P)Baa2, along with the Baa2 senior unsecured ratings of ROP Sukuk Trust and the BSP. The outlooks for both remain stable.
The affirmation gives the Philippines continued rating stability as policymakers work to restore stronger growth while keeping fiscal and financial risks in check.
