Japanese credit watcher Rating and Investment Information, Inc. (R&I) affirmed on Wednesday the Philippines’ “A-” investment-grade rating with a stable outlook.

An investment-grade rating signals low credit risk, thereby helping reduce borrowing costs.

This enables a country to allocate more funds to socially beneficial initiatives and programs.

“The economy of the Philippines continues to grow at a relatively high rate among major countries in Southeast Asia,” R&I said in a report.

R&I said the Philippines is expected to realize stable economic growth as well as higher income level against the backdrop of robust public and private investments, development of domestic business such as Information Technology and Business Process Management (IT-BPM) industry, and population growth, among other factors.

It also cited the country’s inflation rate, which fell to a six-year low of 0.9 percent in July 2025.

The rating agency added that the impact of the 19-percent US reciprocal tariffs is expected to be limited, citing the Philippine economy’s relatively low reliance on exports to the US.

R&I said the Philippines’ manageable current account deficit and debt levels, as well as sufficient foreign exchange reserves, underpin the country’s robust external position.

“The National Government’s outstanding debt for 2024 was 60.7% of GDP. R&I believes that the government debt ratio will remain within manageable level with the progress in reducing fiscal deficits,” it said.

“The government meets its funding requirements mainly through the issuance of government bonds in the domestic financial market. The country has a certain level of debt affordability, given a manageable interest payment burden,” it added.

The agency also cited stability of the banking sector as a key rating driver.

In a separate statement, the Bangko Sentral ng Pilipinas (BSP) welcomed the affirmation.

“The low inflation environment is thanks to the agile and evidence-based monetary policy. This environment supports an investment climate that is conducive to economic growth,” BSP Governor Eli Remolona Jr. said.

“In line with its financial stability mandate, the BSP continues to strengthen the Philippine banking system through policies that underscore strong capitalization, prudent risk management, and sound governance. These enable banks to finance productive economic activities while navigating a fast-evolving global economic landscape,” he added. (PNA)