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By Maricel E. Burgonio, Reporter
Credit-rating firm Standard and Poor’s said
the Philippines’ sovereign rating outlook could be revised to
positive from stable as a result of improvement in revenue
collection.
Based on its latest Asia-Pacific Sovereign
Report card, Agost Benard, associate director for sovereign ratings
agency, said the improvement in revenue collection will help lower
the country’s debt and support its capital spending and achieve a
balanced budget.
Standard and Poor’s gave the Philippines a BB,
or three notches below the investment grade, which determines the
country’s interest costs when it seeks external funding. The
outlook on the rating is stable, which balances increasingly robust
external liquidity and significant improvements in government and
public-sector financial performance.
“The outlook could be revised to positive on
evidence that revenue-generating capacity has fundamentally
improved, such that a sustainable, expanded revenue base provides
for continued fiscal consolidation and debt reduction while also
allowing for ongoing capital spending,” according to the report.
The outlook on the ratings, though, could be
downgraded if fiscal correction is endangered by stalling reforms or
weakening revenue efforts, such as higher than expected deficit or
budget goals that can only be met through reining in spending at the
expense of future growth prospects.
The government announced it will be pushing back
the balanced-budget goal by two years to 2010.
“As this was the original target, and we were
not expecting a balanced budget, there is no rating implication,”
Standard and Poor’s reported.
The government has set a revenue program of
P1.236 trillion this year, which the Bureau of Internal Revenue said
accounts for about 70 percent of the total revenue.
As of May this year, the budget surplus was up
by P7 billion, five-fold higher than the P1.7-billion deficit during
the same period in 2007. This brought the first four-month deficit
to P 18.8 billion.
The government generated P106.9 billion in May,
13.5 percent higher than the P94.1 billion last year, while
expenditures reached P99.8 billion, an increase of 4.1 percent over
P95.9 billion during the same period in 2007.
The deficit is now likely to be about 1 percent
of the gross domestic product, or GDP, because of increased spending
on food subsidies and infrastructure. GDP is the total value of
goods and services produced in a country in a year.
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