Fitch Ratings Downgrades Philippines Credit Outlook to Negative

MANILA, Philippines – Fitch Ratings downgraded the credit outlook for the Philippines to negative from stable on April 20, 2026. The agency affirmed the country's BBB credit rating. The negative outlook indicates a risk of a rating cut within the next 18 to 24 months.

Fitch Ratings stated that the revision reflects the Philippines' elevated exposure to the ongoing global energy shock caused by the Middle East crisis. The country has high reliance on imported oil. Consumers are absorbing most energy price increases, with the government providing targeted subsidies to vulnerable sectors.

the Downgrade Fitch Ratings reported that effects on the credit profile are likely to include lower GDP growth, higher inflation, and a rising current account deficit, with modest risks to public finances. Fitch Ratings also cited a slowdown in public spending as a factor. Public infrastructure spending decreased during the second half of 2025 following a flood control scandal that led to tighter bidding and procurement processes within the Department of Public Works and Highways.

The Philippine economy grew by 3% in the fourth quarter of 2025, missing growth targets. Risks from subdued public spending and the oil crisis could slow economic growth in 2026 amid rising government debt. Fitch Ratings stated that a further increase in the debt-to-GDP ratio and deterioration of foreign-currency reserves could result in a rating downgrade.

Standard & Poor's reduced its outlook for the Philippines to stable from positive last week. A lower credit rating could result in higher borrowing costs for the country and reduced investor confidence.

economist JC Punongbayan stated that the negative outlook serves as a warning for the Philippines to restore public and investor confidence. He outlined policy priorities, including restoring credible and efficient public investment, avoiding broad subsidies, protecting vulnerable groups through targeted aid, and preserving fiscal and monetary credibility amid rising inflation risks.

The negative outlook remains reversible but reduces the likelihood of achieving an A rating from a major credit rating agency. The Bangko Sentral ng Pilipinas noted the downgrade and stated it remains vigilant against spillover effects from the Middle East crisis.

BSP Governor Eli Remolona Jr. said the economy is in a good position with strong growth and a healthy banking sector. The central bank is monitoring the impact of higher oil prices and geopolitical developments on inflation and the overall economy.