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KYOTO,
Japan—Ratings
firm Standard & Poor’s (S&P) on Sunday hinted of a
possible upgrade in the Philippines’ credit rating,
noting the government’s apparent success in pursuing
fiscal reforms.
But
Takahira Ogawa, director for sovereign and international
public finance ratings, said the firm would be closely
watching this month’s national elections to come up with
a decision whether to upgrade the Philippines’ “stable”
rating or maintain it.
“The
[Philippine] macroeconomic situation is doing well and
the government is addressing the fiscal consolidation
issue. What we are watching [is] the May elections…
aside from looking at how the government could further
improve revenue collections,” Ogawa told BusinessMirror.
Any
upgrade in the country’s outlook means the Philippines’
foreign borrowing becomes cheaper. A downgrade,
meanwhile, raises the cost of borrowing as it signals to
potential borrowers heightened risks of lending. The
Philippines, Asia’s largest sovereign issuer after
Japan, had relied on local and foreign borrowings to
finance its fiscal deficit and pay off maturing debt.
“In
general we think the
Philippines
is a great story, going for the right direction but
still we still have a few things [to see]. We like to
see if this story is moving ahead at the right pace, if
there if would be any hindrance because of politics or
because of other hindrance,” he added.
President Arroyo’s economic managers earlier expressed
confidence in getting a ratings upgrade from not only
S&P but Moody’s Investors Service and Fitch Ratings Inc.
by the second half on the momentum gained in
strengthening its fiscal position.
“The
Philippine elections [conduct] is a difficult issue.
Each politician has his own constituency in mind. It is
very important to look at the outcome of the elections
because the winning politicians may have significant
diversified fiscal or economic views,” Ogawa commented,
which in turn may also have an impact on any change in
the overall outlook for the country.
“The
other thing is the government started to move ahead of
its fiscal consolidation despite its debt problem, they
have started to have space for them to increase the
investments for future growth. But the interesting thing
is how government effectively channels public funds to
the real investment activities,” Ogawa added. |
