THE Japan Credit Rating Agency (JCR) has upgraded the Philippines’ credit rating by a notch from BBB+ to A- , citing the country’s resilience amid a pandemic that has slowed down growth, impaired fiscal positions and hurt credit ratings of economies across the globe.

JCR assigned a “stable” outlook on the new rating, which indicates that the “A-” will be maintained over the near term.

Strong fundamentals

In a report released Thursday, June 11, 2020, the JCR said its decision to raise the Philippines’ credit rating came on the back of its assessment that the impact of the Covid-19 crisis on the domestic economy and the government’s fiscal standing will be temporary, given the country’s strong fundamentals going into the crisis, the massive relief measures, as well as the pursuit of important legislation, such as the Corporate Recovery and Tax Incentives for Enterprises Act under the Comprehensive Tax Reform Program.

“JCR holds that a downturn will be limited given the country’s strengthened economic base, resilient external position, and the government’s economic stimulus package totaling more than nine percent of the gross domestic product. JCR also considers that the fiscal soundness will not be impaired because while the fiscal deficit may widen, the package at this time is justifiable and the government debt will remain comparatively subdued,” the JCR said.

“The A- rating upgrade from JCR, which comes at a time when economies across the world are reeling from what could likely become the worst global downturn in nearly a century, is a solid recognition of the Philippines’ capability to stage a quick and strong recovery from this health crisis,” said Finance Secretary Carlos Dominguez III.


Looking ahead, the JCR expects the Philippine economy to bounce back with a growth anywhere between six and seven percent in the medium term following an anticipated contraction this year due to the effects of Covid-19.

The debt watcher likewise recognized the stability of the banking sector, noting that the average capital adequacy ratio of banks in the country stand at a comfortable 15 percent.

It also cited the country’s manageable external debt balance (which was kept low at 22.2 percent of GDP as of end-2019) and the robust foreign currency reserves.

“JCR holds that the country will show its high resilience even when global risk-off moves would be triggered again by a second wave of Covid-19 pandemic,” it said.

The rating upgrade from JCR came following the decision of Fitch to affirm the “BBB” rating it assigns to the Philippines, and the move of S&P Global to affirm the country’s “BBB+.” Both investment grade ratings have a “stable” outlook. (PR)