PH dream of ‘A’ rating still possible despite graft fallout
S&P Global Ratings said the Philippines remained poised to outperform its peers despite a “modest” slowdown linked to the high-profile graft scandal, a performance that should keep the country on track toward a credit rating upgrade.
S&P said the government’s credit metrics were still expected to strengthen “over the next one to two years.”
Over that period, the debt watcher said it expects the country’s twin deficits to narrow, which could augment the state’s credit buffers “sufficiently” to better support a higher rating.
Even so, S&P said the widening probe into anomalous flood control projects and the resulting political fallout may slow the improvement of the country’s debt metrics.
“The government has devoted much attention to the investigations into the alleged misuse of funds and address the impeachment complaints against the president,” S&P said in a note to clients. “At the same time, some infrastructure projects have been halted.”
S&P affirmed the Philippines’ triple B plus ratings late last year, citing the country’s “above-average” economic growth potential and “strong” external position.
The credit rating agency also kept its “positive” outlook on the country, keeping alive the government’s dream of bagging the coveted “A” rating over the next 12 to 24 months.
S&P’s rating scale ranges from D, the lowest, to the highest rating of AAA. Should the debt watcher decide to upgrade the Philippines’ badge of creditworthiness, the next level for the country is A-.
The higher rating means better perception of lenders on a borrower’s ability to pay its obligations. This would result in lower interest rates for issuers like the government. The Philippines also holds investment-grade ratings from Fitch Ratings (BBB) and Moody’s Ratings (BAA2).
The Marcos administration previously admitted that its anticorruption drive had stalled the government’s ambition to bag an A rating. Economic officials lowered their revenue target for this year to P4.82 trillion, from P4.98 trillion before, as the graft scandal drags economic activity.
Data showed gross domestic product expanded just 3 percent in the fourth quarter of 2025—the slowest pace in more than 14 years outside the pandemic. The weak outturn dragged the 2025 growth to 4.4 percent, missing the government’s 5.5-percent to 6.5-percent target.
Looking ahead, S&P projected growth to recover to 5.7 percent in 2026, before clocking in at a faster expansion rate of 6.5 percent in 2027 and 2028.
“Despite a likely economic slowdown, we still expect the Philippines to remain an outperformer among peers at similar levels of average income,” the agency said. “The drag on fiscal revenue may also have only a modest impact on the general government deficit since capital spending will also be lower.”
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