THE Japan Credit Rating Agency (JCR) on Monday affirmed the Philippine sovereign rating at “A-,” citing the economy’s resilience as evidenced by its relatively low debt and unimpaired “fiscal soundness.”

The debt watcher also kept the “stable” outlook on the rating, which means this will likely be maintained in the next 12 to 18 months.

“The ratings mainly reflect the country’s high and sustainable economic growth performance underpinned by solid domestic demand, its resilience to external shocks supported by an external debt kept low relative to GDP and the accumulation of foreign exchange reserves, the government’s solid fiscal position, and a sound banking sector,” JCR said on Monday.

This comes 15 months since the debt watcher upgraded the country’s rating to “A-” from “BBB+” in June 2020.

“(The) Philippine economy stays highly resilient to external shocks even amid the deteriorated global economic conditions,” JCR said.

However, JCR cited the delayed recovery in economic activity due to the tighter mobility restrictions amid a Delta-driven surge in coronavirus disease 2019 (COVID-19) cases.

It expects the economy to log a “slow” 4-5% growth in 2021, matching the full-year target of the government. JCR believes the country could be set for a “high growth path” once the pandemic subsides.

Although the Philippines is currently battling a new wave of COVID-19 infections, the government is set to implement granular lockdowns instead of wider curbs in the capital. The Health department on Monday logged 22,415 new COVID-19 infections, another record high. This brought the active caseload to 159,633.

However, the credit rating agency said the government has “swiftly” implemented measures such as “increased public health-related expenditures, acceleration of vaccination and continuation of employment program by drawing upon its relatively strong fiscal position before the pandemic.”

Japan’s debt watcher believes the government’s fiscal policy remains appropriate despite wider budget shortfall.

The budget gap reached 7.3% of the country’s GDP in 2020, much bigger than the 3.4% in 2019. This year, the fiscal deficit is capped at 9.3% of GDP.

“JCR does not consider that the fiscal soundness will be impaired because while the fiscal deficit has widened, the support package at this time is backed by appropriate fiscal policies and the government debt will remain comparatively subdued,” it added.

Also, JCR noted the Duterte administration’s flagship infrastructure projects have not been delayed despite the pandemic. The government has allowed work on public infrastructure projects to continue even during the strict lockdowns.

“Legislation proposals including tax reforms have been steadily progressing backed by the administration’s high performance and trust ratings,” JCR said.

Remittances from overseas Filipinos remained “solid,” it added. — Luz Wendy T. Noble