Moody’s starts review of PH rating

The government’s failure to spend its budget within schedule will be one of the main issues to be discussed in meetings between state economic managers and representatives from Moody’s Investor Service this week.

Moody’s representatives are in Manila as part of the debt watcher’s process in reviewing the Philippines’ sovereign credit rating.

Moody’s still considers long-term peso and dollar bonds issued by the Philippine government as “junk” investments. The firm’s peers, Standard & Poor’s and Fitch Ratings, already rate the Philippines at investment grade.

“Funding is not the issue. The issue is capacity to spend the money,” Moody’s senior analyst Christian de Guzman said Monday.

De Guzman was speaking ahead of a meeting with Finance department officials Monday afternoon. Among those in the meeting were Finance Undersecretary Jeremias Paul Jr., Assistant Secretary Teresa Habitan and Customs Commissioner Ruffy Biazon.

De Guzman recognized that government spending has increased significantly this year and this has helped prop up economic growth.

In the first half of the year, the government spent P890.75 billion of its P1.8-trillion budget. Although spending from January to June period was up 12 percent year-on-year, this was still below the state’s spending goal of P945.7 billion for the period.

As a result, the government’s fiscal deficit at the end of June stood at P51.29 billion, nearly 40 percent below the cap of P84.66 billion. This was despite the failure of the bureaus of Internal Revenue and of Customs to meet their respective collection targets for the six-month period.

De Guzman noted that the government has had significant success in implementing small “shovel-ready” projects, partly making up for the failure to roll out big-ticket items under the administration’s public-private partnership (PPP) scheme.

“Most of the big-ticket projects, it has something to do with the private sector’s willingness to engage those projects,” De Guzman said. “The performance has been quite good in terms of getting some of those projects up and coming and they’ve been very successful.”

In a separate statement, National Treasurer Rosalia de Leon said the main thrust during the meetings would be to stress that the ample liquidity in the economy gave the government various favorable funding options.