Moody’s Ratings affirmed the Philippines’ long-term local and foreign currency issuer and senior unsecured ratings at Baa2 with a stable outlook, citing progress in fiscal consolidation despite elevated debt affordability pressures.
The ratings agency also maintained the government’s foreign currency senior unsecured shelf rating at (P)Baa2, the ROP Sukuk Trust’s backed senior unsecured rating at Baa2, and the senior unsecured ratings for Bangko Sentral ng Pilipinas at Baa2. The affirmation follows a review of the country’s fiscal trajectory and economic resilience amid external shocks.
Moody’s projected real GDP growth to average around 3.6% in 2026, well below the country’s medium-term potential, before recovering to approximately 5.3% in 2027. The general government deficit is expected to narrow to about 3.9% of GDP in 2026 from 4.3% in 2024, supported by ongoing fiscal consolidation efforts.
The government’s debt burden is projected to peak near 58% of GDP between 2026 and 2027 before gradually stabilizing and declining. However, debt affordability remains a concern, with interest payments projected to exceed 14% of revenue over the next two to three years as maturing debt is refinanced at higher yields.
Near-term economic pressures include elevated food and energy prices linked to the Middle East conflict and a sharp contraction in public investment following an investigation into flood-control projects. Moody’s noted the Philippines’ strong access to domestic and international funding markets and sufficient foreign-currency reserves as key credit strengths.
The ratings agency highlighted challenges including weakening debt affordability, institutional quality constraints, low income levels, and high exposure to physical climate risks.
