THE revised tax-reform package could lead to a sovereign credit upgrade from at least one of the major rating agencies, as revenues are boosted and critical projects and programs are pursued, an international financial institution said.
Analysts at Credit Suisse said the tax-reform agenda that has just been approved at the House of Representatives is seen as credit positive for the Philippines.
“We believe what matters most from the credit rating agencies’ perspective is the revenues generated over time, and not just one year’s revenues. While the revised version of the bill implies that some revenues will be back-loaded, the total tax receipts generated by 2020 are actually quite similar,” Credit Suisse analysts said.
It was estimated the government could boost spending equal to a percent of local output or the GDP and scale back the overall government debt metrics with the added revenues.
“We see a good likelihood that Fitch will upgrade the Philippines to ‘BBB’, from triple ‘B minus’ [BBB-] if the tax-reform bill eventually passes as written,” Credit Suisse said. Fitch earlier indicated imminent upgrade for the Philippines when it assigned the $292-billion economy a “positive” outlook.