|
By Maricel E. Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP)
said the country’s credit-rating outlook is likely to improve this
year given the reduction of its debt levels.
“If you look at indicators, it
should be possible. We’re seeing some improvements in the
debt-to-GDP ratios,” BSP Governor Amando Tetangco Jr. said,
referring to a key measure that compares the level of debt to gross
domestic product, which is the amount of goods and services produced
locally.
The government expects its debt
to go down to 58 percent of total economic output this year from 65
percent last year, as it consolidates its debts and cuts on
borrowings.
From 58 percent this year, the
government aims to further reduce this ratio to 52 percent next
year, 46 percent in 2009 and 41 percent in 2010.
Representatives of foreign-rating
companies have visited the country in recent months. They include
Moody’s Investors Service, Fitch Ratings Inc., Standard &
Poor’s Ratings Services (S&P) and Ratings and Investments Inc.
The rating firms are expected to improve the country’s outlook to
positive in the second half of the year from stable at present. A
stable outlook means status quo, while a positive outlook means an
upgrade is highly probable.
To date, the Philippines remains
below-investment grade.
In a report, Credit Suisse expect
Moodys and S&P to upgrade the country’s sovereign rating in
the latter part of the year, or early 2008 if the rating outlook
were revised to positive before the end of the year.
“We see the potential for
Moody’s and S&P to change the rating outlook to positive and
upgrade in the late 2007 or 2008,” the investment bank said.
Credit Suisse said the
government’s budget deficit program will be low enough to reduce
the country’s debt-to-GDP ratio rapidly.
“Assuming fiscal deficit of 1.3
percent to 1.7 percent of GDP in 2007 and 2008, the government
dynamics are favorable. We estimate that the ratio of consolidated
government debt to GDP to fall 50 percent in 2006 from 58 percent in
2005,” the report read.
Credit Suisse said the government
could push for more measures, including the rationalization of tax
incentives and indexation of taxes.
Earlier, the government said it
expects to cut its budget deficit to P63 billion this year, and
break even from 2008 to 2010 given plans of additional spending for
infrastructure development.
|
