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PHL fiscal spending satisfies debt-watcher Moody's
Fiscal spending by the Philippines helped grow the economy despite the fact that government was spending less that it should, debt-watcher Moody’s Investor Service, whose audit team is now doing a country review for a possible credit rating upgrade to a coveted investment status, said.
“Right now we are still underspending,” Christian de Guzman, Moody’s senior analyst and Sovereign Ratings Group vice president, told reporters Monday.
“But at the same time if you look at the fiscal impulse and how growth has actually been aided by fiscal spending in the past, some of the criticisms are unfounded because the government is doing what it can,” the analyst noted.
“The screws were tightened in 2011 that led to a lot of the underspending. But since then the performance has been quite good in terms of getting some of those projects up and coming and they’ve been very successful,” De Guzman added.
However, private sector initiative in joining big-ticket investments in infrastructure hinges on their willingness to be a part of government's flagship program on investments, according to the Moody's analyst.
Still, the macro-economic aspect reflects revenue growth that has been quite impressive in the absence of wide-ranging reforms, he said.
De Guzman acknowledged a problem area in the performance of the Bureau of Customs, a revenue-agency. “If we look at that, yes there is a problem. But it would be unfair to single out a particular bureau when you have, on the whole, a very good performance,” he said.
In June, the bureau collected P23.43 billion registering a P5.43 billion shortfall in revenue goal of P28.86 billion. The collections brought to P145.19 billion the bureau’s revenue in the first half or P18.66 billion below its six-month goal of P163.85 billion.
Apart from taking a look at the economic performance and government funding situation, Moody’s will scrutinize the fiscal realities and debt dynamics, political stability, and government policy mandate in assessing the Philippines.
“The review will focus on the sustainability of the above factors and the relative strength of underlying credit metrics compared to investment-grade peers in the Baa rating range,” according to the debt-watcher.
It will also take a look at government's foreign currency shelf rating and the ratings on liabilities of the Bangko Sentral ng Pilipinas.
Fitch Ratings gave the Philippine sovereign sovereign debt an investment grade on March 27, and Standard & Poor’s did the same on May 2.
VS, GMA News
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