RP ripe for credit rating upgrade, says Abad

MANILA, Philippines - The Philippines is ripe for a credit rating upgrade given the fiscal reforms that the government has been implementing, Budget Secretary Florencio Abad said yesterday.

Fresh from his recent trip to the United States where he attended the World Bank annual meeting, Abad said the Philippine government team met with representatives from credit rating agencies Moody’s Investors Service, Fitch Ratings and Standard & Poor’s.

These debt watchers are expected to send review teams in November as part of their regular monitoring of countries including the Philippines.

“We have enough reasons for the Philippines to have an upgrade,” Abad told reporters yesterday on the sidelines of a budget hearing at the House of Representatives.

He noted that the government has been implementing reforms such as prudent spending and enhancement in tax administration.

The government has also been more transparent with its spending activities and revenues, Abad noted.

Furthermore, Abad said the government plans to cut the country’s debt-to-gross domestic product (GDP) ratio to drop to 47 percent from 57 percent in 2009 and the projected 58 percent in 2010.

Private analysts have said that the Philippines may indeed get a rating upgrade.

Citigroup, for instance, believes that the public private partnership (PPP) initiative of the Aquino administration would result in a sustained economic growth, paving the way for a much-awaited credit rating upgrade for the Philippines.

“It’s our view that investment-driven growth bodes well for fast-tracking fiscal consolidation and perhaps may be the missing piece in the country’s quest for an investment credit rating upgrade,” Citigroup said.

Abad said that government’s PPP projects would strongly improve the country’s chances for an upgrade.

The government, through the National Economic and Development Authority (NEDA) has laid down a Medium Term Public Investment Plan for 2009 to 2013 worth P3.1-trillion covering transport and airport projects that are essential in lowering logistical and production costs across the different regions and at the same time to boost economic growth and employment.