S&P sees no change in gov’t credit rating
Watchdog forecasts 2008 GDP growth at 5.5%
By Doris Dumlao
Philippine Daily Inquirer
First Posted 01:59:00 06/25/2008
The government’s decision to push back its target of balancing the budget from this year to 2010 will not affect the Philippines’ sovereign credit rating, the US-based credit rating firm Standard & Poor’s said.
“As this was the original target, and we were not expecting a balanced budget, there is no rating implication,” said analyst Agost Benard in an Asia-Pacific sovereign credit research released Tuesday.
S&P currently rates Philippine government debt at three notches below investment grade. It is more bullish than the US-based Moody’s rating of four notches below investment grade but gloomier than UK-based Fitch Rating’s score of two notches below.
The government has said it will no longer push for a balanced budget this year and instead aim for a deficit of up to P75 billion because it has to spend more to counter the effects of skyrocketing food and oil prices.
S&P expects the Philippine economy as measured by gross domestic product to grow 5.5 percent this year, due largely to strong domestic demand.
“The key issue remains that revenue collection should meet its goals and so address this longstanding deficiency,” Benard said.
S&P said the 17.9-percent rise in revenue collections by the Bureau of Internal Revenue in the first four months of the year was “encouraging” while expenditure growth remained low at 6.0 percent.
“Spending will increase later in 2008 as a rice subsidy and a one-off electricity subsidy to four million households kick in,” he said.
Benard said the outlook could be revised to “positive”—a prelude to a credit rating upgrade—if revenue collection is improved. With editing by INQUIRER.net
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