In a statement, the international debt watcher said that, over the past few years, the administration has introduced policies aimed at liberalizing the economy and attracting foreign investments, which it believes will sustain the country's high medium-term growth potential.
“The rating affirmation also takes into account that fiscal consolidation will resume with the debt burden to remain higher than pre-pandemic levels but comparable to similarly rated peers over the medium-term,” Moody’s said.
The firm said that the ratings decision also took into account challenges faced by the country like weakening debt affordability amid rising interest rates and a depreciated peso.
Key structural issues include the Philippines' relatively low per capita income and ongoing institutional constraints.
Additionally, the country faces significant exposure to physical climate risks and ongoing geopolitical tensions with China over the South China Sea, it said.
Moody’s said economic resilience in the Philippines is expected to be underpinned by robust household consumption, increased public and private investment, and a recovery in exports.
However, ongoing social challenges, such as high poverty levels and limited access to education and training, could limit long-term growth potential, it warned.
The affirmation of the credit rating signifies international confidence in the Philippines' economic management and the effectiveness of its fiscal strategies, supporting continued investment and economic stability, the firm said.
