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FITCH Ratings Inc. has ruled out chances for the
Philippines meeting its balanced-budget goal this year.
“The bottom line is we’re
still projecting deficit. We’re not looking for any balanced
budget. Not good or bad to be honest because government debt ratios
continue to decline—that’s a bigger focus for us than a given
year’s fiscal balance,” James McCormack, Fitch head for Asia
sovereigns, told reporters on Tuesday.
McCormack, who is leading a team
from the international credit rating firm for regular consultations
with the government in Manila, said a decreasing debt-to-GDP (gross
domestic product) ratio is a more important measure of the
Philippines’ fiscal position.
“Public finance dynamics [are]
still broadly positive. Once debt ratios continue to fall, you
can’t be overcritical of public finance even if there’s a small
deficit. A deficit of P100 billion sounds like a lot but
percentage-wise of GDP, it’s quite small,” he said.
With the country amid a rice
crisis, the Fitch official said the rating company has yet to look
into the implications of that problem on the government’s fiscal
position. “Because there might be some subsidy issues and [we]
won’t really be sure how its [going to] be reflected in the
national budget. [It] might be a broader public finance issue,” he
said.
In a statement, Finance Secretary
Margarito Teves however urged investors to take stock of the
Philippines’ good economic prospects and sound macroeconomic
fundamentals despite the noise created by global inflationary
pressures and economic volatility.
“The Philippine government is
committed to raising revenues to fully finance the budget this year.
We are not wavering in this plan, and, if necessary, we will boost
spending on agricultural production by looking for additional
sources of revenues or support from government corporations or
financial institutions,” he said.
“In the meantime, we will
continue to push for reforms to improve revenue collection and
unlock the country’s potential for higher and sustained economic
growth,” he added.
UBS Investment Research said
chances are high that the Philippines would run a wider deficit,
given government’s plan to raise infrastructure spending to
cushion the country from the impact of a US recession.
Despite higher construction
investment as a percentage of the economy, the Philippine ratio
remains low historically, the investment bank said.
Amid the possible US recession,
UBS said private sector and foreign funding ability in the short
term is difficult, and in the long term moderate.
The Department of Budget and
Management has programmed P113 billion for infrastructure spending
this year. Of this amount, 60 percent will be made available in the
first semester.
The national budget for
infrastructure projects this year is higher by 22 percent than last
year’s P92.6 billion.
--Chino S. Leyco
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