PH, Asia-Pacific banking system stable


Debt-watcher Moody’s Investors Service on Thursday said that the outlook for the banking system in the Philippines and the rest of Asia-Pacific region remains stable.

In the report “Asia-Pacific 2013 Sovereign Mid-Year Update: Broad Regional Stability Amid Continuing External Volatility,” Moody’s said that banking system outlooks are stable in nine out of 15 rated systems in Asia Pacific.

“The positive outlook for the Philippines is unique globally, while those for Hong Kong, Mongolia and Singapore have been revised to negative this year. Although we do not expect banking system stress to materially affect sovereign creditworthiness in these countries, there continue to be important channels of transmission,” it stated.

Moody’s also said that sovereign ratings in the region are likely to withstand the effects of the moderation in global demand and the volatility in global capital markets.

“Most key metrics related to growth, fiscal and external performance remain well-positioned as compared to the period prior to the Global Financial Crisis,” it added.
Furthermore, the ratings agency said that government finances in the Asia Pacific remain relatively sound.

It said that governments in the region are seen running relatively tight fiscal policies, or continuing with gradual fiscal consolidation, noting that it do not see any cases of material fiscal deterioration this year.

“In the Philippines, although the government frontloaded fiscal outlays earlier in the year to avoid disruptions related to a ban on spending ahead of midterm elections in May, its deficit remains relatively narrow, given the continued improvement in revenue performance,” it stated.

The country’s fiscal deficit as of May reached P13.164 billion, while cumulative deficit from January to May reached P42.839 billion.

However, Moody’s added that the region’s expected average debt-to-gross domestic product (GDP) ratio moves up only slightly, to an average 49 percent for 2011 to 2014 from 47 percent during the precrisis period.

“Overall, Indonesia and the Philippines have featured the biggest improvements in terms of their percentile ranking. High economic growth, narrow fiscal deficits and exchange rate appreciation have combined to lead to debt consolidation in both countries and have contributed to the upward trajectory in their ratings,” it said.

Philippine debt-to-GDP ratio in the first quarter of 2013 eased to 48.9 percent.


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