In a report released Wednesday, Malaysia-based RAM Ratings Services Berhad (RAM) announced that it upgraded the Philippines’ global credit rating by one notch to “gBBB2(pi),” or BBB equivalent, a notch above the minimum investment grade. The upgrade was on the back of the country’s sustained growth momentum, a persistent uptrend in foreign direct investment (FDI) inflows, and continuous progress in the government’s economic reform program.

RAM also raised the Philippines’ regional and Malaysia national ratings to AA3, three notches away from the highest rating of Triple A, citing the country’s “superior capacity to meet its financial obligations.” All new ratings were assigned a “stable” outlook premised on the country’s “strong external position and economic resilience amid ongoing reforms.”

Under RAM’s definitions, a global rating reflects a country’s perceived creditworthiness compared with countries from around the globe, while a regional rating shows comparison vis-a-vis other Southeast Asian countries. A Malaysia national rating, meanwhile, reflects perceived credit-worthiness before Malaysian investors.

The Malaysian debt watcher also took note of recent legislative reforms deemed vital to further economic growth: tax reforms, the national ID system, the Ease of Doing Business Act, and the shift from obligation to cash basis in the national budgeting system.

It pointed out that “the government’s ambitious infrastructure programme is broadly on track,” given that “out of 75 flagship projects, 35 projects had been approved by the authority as ofJune 2018 compared to 18 a year ago.”

It also cited growth in FDIs, the rate of which is among the fastest in the region. Net FDI inflows amounted to $4.8 billion as of May 2018, up by 49.0 percent year-on-year.

RAM also expressed confidence that the moderation of the Philippines’ economic growth to 6.0 percent in the second quarter still kept the economy among the fastest growing among emerging markets in Asia.

On the recent uptick in inflation, RAM noted such to be “manageable and transitory, given various reforms and policy measures aimed at strengthening government operations and more inclusive growth in the long term.”

The debt watcher likewise recognized the strength of the Philippines’ external payment position, acknowledging that the country’s current account deficit was driven by capital imports, cited by Philippine economic managers as a sign of rising investments in the country.

“In the absence of capital imports, the Philippines’ current account is basically still in surplus position,” RAM said. It also cited the country’s ample gross international reserves, which at $76.7 billion as of July, are sufficient to cover more than 6.1 times the country’s short-term external debt based on original maturity and equivalent to 7.4 months of imports.

Finance Secretary Carlos Dominguez III said the latest upgrade from Southeast Asia’s leading credit rater “keeps the Philippines on a positive credit rating momentum, solidifying our key message to investors and other international stakeholders that reform-oriented leadership under the Duterte Administration boosts economic competitiveness as a result of sustained reforms to maintain fiscal stability and discipline while pursuing an aggressive state spending program that fuels high–and inclusive–growth over the medium term.” The Finance Secretary added that, “With this year’s implementation of the first package of the Comprehensive Tax Reform Program (CTRP)–the Tax Reform for Acceleration and Inclusion (TRAIN) Law—there is, in place, a steady revenue source for programs meant to sustain and even boost the momentum of the country’s increasingly investment-led growth.”

Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla, Jr. responded by saying that “The credit rating upgrades from RAM are an acknowledgement of sound governance on both the financial and monetary fronts.” He also said, “The BSP will continue to be a pillar of strength for the economy by remaining committed to its price and financial stability mandates, as well as by pursuing additional reforms to make the financial system even more inclusive and responsive to the needs of consumers and investors.”

Opinions of RAM Ratings Services Berhad help guide investment decisions of corporate entities, particularly from Malaysia.

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