The Japan Credit Rating Agency (JCR) has reaffirmed its confidence in the Philippines, citing the country’s strong and sustainable economic growth and the soundness of its banking system as key drivers behind its continued investment-grade credit rating.
In its latest report released Thursday, JCR highlighted the Philippines’ robust domestic demand, low external debt, and resilience to global shocks—backed by ample foreign exchange reserves and a stable financial system—as major factors supporting the country’s “A-” rating with a “stable” outlook, which was reaffirmed last June.
JCR noted that government-led infrastructure projects have fueled strong economic growth alongside vigorous private consumption and fixed capital formation, adding that this high growth is expected to persist over the medium term. It also acknowledged the Marcos Jr. administration’s efforts to advance fiscal consolidation, infrastructure development, and poverty reduction, saying “steady progress has been achieved so far.”
An investment-grade rating signals low credit risk, helping lower borrowing costs for the government and freeing up resources for vital social programs and infrastructure initiatives.
JCR further underscored the resilience of the Philippine banking system, pointing to strong loan growth, a declining non-performing loan (NPL) ratio, and capital adequacy ratios well above both local and international standards. As of end-July 2025, the capital adequacy ratio of universal and commercial banks stood at 16.5 percent on a consolidated basis, while the NPL ratio eased to 3.1 percent from 3.6 percent in 2021.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. welcomed the assessment, saying the BSP continues to implement policies that strengthen bank capitalization and risk management, thereby “supporting financial stability and building confidence in the domestic financial system.”
JCR also cited easing inflation, which averaged 1.7 percent from January to August 2025, and robust gross international reserves (GIR) of $105.9 billion as of end-August—equivalent to 7.2 months’ worth of imports and 3.4 times the country’s short-term external debt. The agency said the Philippines’ “solid foreign currency liquidity position” enables it to remain “remarkably resilient” against external shocks.
Looking ahead, JCR noted that achieving government targets—including higher per capita income, lower poverty rates, expanded employment opportunities, sustained infrastructure investments, and structural reforms—would further boost the country’s credit standing, while any setbacks in fiscal reforms could weigh negatively on its rating.