Gov’t spending still a concern, says Fitch

MANILA, Philippines - State spending was the primary concern of Fitch Ratings when it consulted with government agencies regarding the state of the Philippine economy, an official from the Department of Finance said.

“They asked about the status of the fiscal expenditures. It was really more on spending,” Finance Undersecretary Gil Beltran told The STAR.

“Personally, I told them the agencies are constantly being monitored by the Office of the President and that they are doing everything, especially since their disbursement evaluation will affect their PBB (performance-based bonus),” he explained.

The conference call with the New York-based debt watcher was held last Sept. 1, according to the Bangko Sentral ng Pilipinas (BSP) Investor Relations Office.

It was attended by officials from the DOF, the Bureau of the Treasury, the Department of Budget and Management and the BSP.

Fitch was the first of the major credit raters to raise the Philippines to investment grade status in March 2013. Since then, other debt watchers, Standard & Poor’s (S&P) Ratings Services and Moody’s Investors Service, have raised their evaluation of the country ahead of Fitch.

Moody’s puts the Philippines at Baa2, while the S&P ranks the country at BBB. Both ratings, which have stable outlooks, fall a notch above the minimum investment grade status.

Fitch, on the other hand, has maintained its BBB- rating, the lowest investment grade, since March two years ago.

Nicholas Antonio Mapa, an economist from Bank of the Philippine Islands, said Fitch’s inquiry could be taken as a sign of concern for the country’s fiscal sustainability.

“Fitch is the only credit rater that is yet to push us to another (level) of investment grade status. I guess they are cognizant of the fact that while we managed to keep our budget in check, if this is at the back of underspending, then it is counterproductive,” Mapa explained in a phone interview.