MANILA, Philippines - State revenues have been “very good†despite the absence of far-reaching structural reforms, boosting the Philippines’ chances of grabbing that much-coveted investment-grade status from Moody’s Investors Service.
“Looking at the macro level, revenue growth has been quite impressive in the absence of wide ranging reforms,†Moody’s vice-president and senior analyst Christian de Guzman told reporters yesterday.
“On the whole, a very good performance,†he said ahead of a meeting of key economic officials.
A four-member team from New York-based debt watcher is currently in town to evaluate the country’s economic performance. This was after Moody’s put the country’s Ba1 rating on “review for upgrade†last week.
Under Moody’s metrics, the country is still on junk grade even after the credit rater’s rivals, Fitch Ratings and Standard & Poor’s Ratings Services, upgraded their evaluation to BBB-, an investment grade, with a stable outlook.
The concern has always been the government’s fiscal performance, with De Guzman noting last March that revenues, as a proportion of gross domestic product (GDP), still lag behind its neighbors.
As of the first quarter, revenues accounted for 13.7 percent of GDP, nearing this year’s target of 14.7 percent, latest Department of Finance (DOF) data showed. This was far from other countries’ 20-percent ratio or more.
There was also the issue of “underspending,†he said yesterday, noting however that such scenario in 2011 is already being reversed. “The government is doing what it can,†De Guzman said.
As of the first half, the Aquino administration spent a total of P890.754 billion, up 12-percent from a year ago, but still below the P945.648-billion cap during the six-month period, DOF data showed.
“Right now we are still underspending. But at the same time if you look at the fiscal impulse and how growth has actually has been aided by fiscal spending, some of the criticisms have been unfounded,†De Guzman explained.
The same is true for the delayed roll-out of public-private partnership (PPP) projects as De Guzman pointed out it was necessary for the government to “tighten the screws†in bidding back in 2011.
The PPP projects, of which only three have been successfully bid out since November 2010, were hit by delays coming from project reviews and changes in leadership in some key departments.
“Since then the performance has been quite good in terms of getting some those projects up and coming and they’ve been very successful,†he pointed out.