MONETARY and finance authorities downplayed Fitch Ratings’ decision to revise the Philippines’ outlook to negative, declaring that the country remained “on solid footing,” but an economist warned that the downgrade had ended hopes of securing an “A” rating.
“Based on Fitch’s definition, revision in the outlook does not imply a rating change is inevitable,” the Bangko Sentral ng Pilipinas (BSP) said on Monday.
As the country continues to be rated “BBB” by Fitch, the Department of Finance (DOF) said this still “reflects our strong economic fundamentals and sound fiscal position.”
“The Philippine economy remains on solid footing with a robust domestic market, stable financial system, and recognized reforms,” it added.
In revising the country’s outlook, Fitch said the change “reflects rising risks to the Philippines’ strong medium-term growth prospects from recent disruptions to public investment, exacerbated in the near-term by elevated exposure to the ongoing global energy shock.
A negative outlook signals an increased risk of a ratings downgrade over the medium term — usually within 12 to 18 months.
Fitch warned that a ratings downgrade could be triggered by weaker confidence in medium-term growth, a rise in government debt, or a worsening external position.
However, BSP Governor Eli Remolona Jr. said the “economy remains in a good position because growth is strong and banks are in good shape.”
“The outlook revision reflects changes in the balance of risks surrounding the rating, amid global energy shocks,” he added.
Fitch flagged the Philippines’ high dependence on imported energy, leaving it exposed to ongoing geopolitical tensions in the Middle East.
The credit rating agency expects the energy shock to weigh on growth, drive up inflation, and widen the current account deficit.
Inflation is projected to accelerate sharply to an average of 4.1 percent in 2026 from 1.7 percent in 2025, with risks skewed toward even higher inflation if energy prices remain elevated.
The debt watcher expects Philippine economic growth to remain muted, edging up to a below-target 4.6 percent this year following 2025’s 4.4 percent.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the outlook should serve as a “reality check.”
“The upgrade story is clearly over, and the Philippines is now in defense mode,” he added, although a downgrade is not imminent.
Ravelas said the country would be able to keep its investment-grade rating as long as economic growth stabilizes, inflation remains contained and the fiscal execution improves.
But he warned that risks remained elevated, particularly if oil prices stay high and the current account deficit continues to widen.
“If oil prices stay high and the current-account deficit widens without a strong policy response, the cushion protecting our BBB rating gets very thin,” Ravelas said.
Meanwhile, Philippine Institute for Development Studies senior fellow John Paolo Rivera said an upgrade to “A” was still possible but could be delayed “given current global uncertainties and some recent rating pressures.”
Key risks to the outlook include persistent fiscal deficits, rising debt servicing costs, slower economic growth and external shocks.
“These factors weaken fiscal consolidation efforts and investor confidence,” Rivera said.