Purisima says Phl to attain investment grade soon

MANILA, Philippines - The Philippines is expected to attain an investment grade from global credit rating agencies within the Aquino administration’s term amid improving fiscal situation, declining debt- to-economic output ratios and strong external liquidity.

This is according to Finance Secretary Cesar Purisima, who reiterated the government’s commitment to fiscal sustainability.

He said the government remains committed to narrow the budget deficit to 3.2 percent of gross domestic product (GDP) this year and to below three percent by 2012.

The goal is to bring the budget deficit to 2.6 percent in 2012 and to two percent by 2013, the Finance chief pointed out.

With these goals, Purisima said the Philippines deserves a credit rating upgrade from the three major global rating agencies – Moody’s Investor Service, Fitch Ratings and Standard & Poor’s.

Purisima was in New York and Washington recently and met separately with the representatives of the three debt watchers.

The Philippines has a rating that is three notches below investment grade by Moody’s and two notches below investment grade by Fitch and S&P.

“Our debt ratios and deficit are declining and our financial sector is well managed and so we deserve better ratings,” Purisima said.

As such, he believes that an ivestment grade is “attainable within President Aquino’s term.” A better credit rating would mean lower borrowing costs for the government.

Last year, the government i curred a budget gap of P314.4 billion or below the goal of P325 billion.

This year, the deficit is expected to hit roughly P300 billion.

Last week, the government reported a first quarter deficit of P26.197 billion or below the goal of P112 billion for the period.

Purisima attributed the better-than-expected deficit to improved collections by the two main agencies and prudent spending by the government.

In the first quarter, revenues rose 21.5 percent to P323.1 billion while expenditures declined 12.7 percent to P349.3 billion.