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THE
country’s public-sector debt ratios remain relatively
high compared to countries of similar stature as Manila,
in spite of having been pared down from historic peaks.
This was
the assessment that Moody’s Investor Service issued on
Thursday.
This
would force government to set aside a large portion of
its revenue for debt service and this, in turn, would
make it difficult to fund an ambitious infrastructure
buildup program, reported Moody’s analyst Thomas Byrne
out of Hong Kong.
The
evaluation was in Moody’s annual report on the
Philippines, whose credit outlook was rated “stable” and
its foreign and local-currency IOUs given a B1 rating to
reflect a “relatively high sovereign debt burden that
leaves its fiscal and external sectors vulnerable to
shocks.”
Byrne
reported the government revenue base at present remains
inadequate to support higher spending in public
infrastructure necessary for long-haul growth and
sustainability.
He
traced this in part to “large interest payments” on debt
that historically equal 30 percent of the country’s
annual budget.
The
Department of Finance acknowledged the country’s debt
stock remains relatively high, but pointed out the
increase in national government debt was lower than
overall growth measured as the gross domestic product.
Debt
stood at 63.7 percent of GDP at end 2006, down from 71.5
percent in 2005, a senior finance official noted, adding
that the plan was to lower it further this year to
around 59.5 percent of GDP.
The
official, who requested anonymity, also conceded as
valid the observation that revenue flows are not enough
for the five-year, multitrillion-peso infrastructure
plan, given that tax collection efficiency has dropped
to just around 60 percent of GDP from more than 70
percent in the mid-1990s.
He added
that Internal Revenue chief Jose Mario Buñag had been
tasked to deliver an additional P47 billion this year,
but so far, has not has not delivered even 25 percent of
that target.
Finance
officials declined to identify the areas in which Buñag
was weak in collecting taxes. What is known is that 64
percent of BIR annual collections are from large
taxpayers. |
