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WEAK tax revenue collections and the country’s
fiscal situation remain a concern for at least one of the three
international credit rating agencies, before it can give a new
economic outlook.
In a briefing, Agost Benard,
Standard & Poor’s (S&P) associate director said they are
weighing the weaknesses and the positive improvements on the
Philippines’ micro-economy, adding they have already seen some
improvements in the country’s fiscal position.
To date, S&P holds a BB-minus
grade on the country’s long-term foreign-currency rating. This is
three notches below investment grade. The rating firm’s outlook is
stable, which means it expects the country to retain its present
credit standing in the next six months to a year.
Representatives of the US-based
firm, which rates the credit worthiness of countries and companies,
had met with officials from the Department of Finance, Bangko
Sentral ng Pilipinas and National Economic Development Authority.
Benard also said S&P wants to
see a balanced budget this year and sustainable improvement in the
country’s fiscal position.
“I am hopeful it will be
successful, be replicated this year as well with the increase in
revenues, increase in contribution from tax revenues as distinct
from privatization,” Benard said.
He added that the revenue
collection of the Bureaus of Customs and Internal Revenue remain an
area for uncertainties on the part of the government.
S&P earlier said the ongoing
political noise on allegations of corruption in a government project
would affect its ongoing review of sovereign ratings for the
Philippines.
Benard added reports that Finance
Secretary Margarito Teves will resign is “very unfortunate”
because of the fiscal improvements he has done for the country in
the past three years.
Another rating firm, Moody’s
Investors Service, upgraded its rating outlook on the country from
stable to positive, which means an improvement in the country’s
actual rating may be expected in the next six months to a year.
Tom Byrne, Moody’s senior
vice-president, said the country’s improved macroeconomic
conditions and fiscal performance are mutually reinforcing each
other. Low inflation has anchored inflationary expectations, despite
pressure from high world food and oil prices.
Despite its outlook upgrade,
Moody’s reiterated that tax revenues and not privatization
proceeds should finance governments’ future infrastructure
projects.
--Chino S. Leyco
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