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MOODY’S
Investor Service has only been in Manila half its
regular assessment time, but already its team of experts
are dangling the likelihood of a credit upgrade.
The Investor Relations Office (IRO), an
adjunct of the Bangko Sentral ng Pilipinas (BSP), said
Moody’s complemented BSP Governor Amando Tetangco Jr.
and Finance Secretary Margarito Teves “for pushing
successfully for fiscal consolidation.”
Other official sources said, however,
Moody’s had expressed concern over Manila’s reliance on
asset-sale proceeds to buttress revenue flows last year.
Moody’s is on a weeklong review of the
economy to find out whether the government consolidation
program was on track and whether or not this was
sustainable for the long haul.
“Moody’s highlighted sustainability of
fiscal reforms to reduce the deficit and cap
accumulation of debt over the medium term as key to
effecting positive change in [credit] outlook and
rating,” the IRO said in a statement.
Still, sources said the credit raters were
concerned the government’s multibillion-peso
infrastructure program might not get the funding it
requires to boost growth not just for now but for the
long haul.
The concern was fueled by the deterioration
of the tax-effort ratio to just 14 percent as of
end-September 2007, or lower than the year-ago ratio of
14.3 percent.
Teves attributed the lower efficiency to
the downtrending interest-rate regime last year and the
appreciating peso adversely impacting on import
revenues.
Teves also told Moody’s the Bureau of
Internal Revenue (BIR), which collects more than 80
percent of total revenue flows, posted only a 6-percent
revenue collection growth in the first half last year
under its then chief Jose Mario Buñag.
The BIR
under Lilian Hefti would only later in the second half
more than double the agency’s efficiency to 14 percent.
According to the IRO, Moody’s told government the clear
efforts to step up revenue collection and to further
strengthen its consolidation goals were “credit
positives.”
However,
Moody’s also warned a reversal of such reforms such as
the proposed suspension of the expanded value-added tax
as mitigating measure to the rising oil prices “will
have negative repercussions and will impact unfavorably
on the (country’s) sovereign outlook and rating,” the
IRO said.
The
administration had shot down the VAT suspension scheme,
which was proposed in the House. --J. Vallecera |
