Fiscal authorities seek Moody's rating upgrade

By Iris C. Gonzales, The Philippine Star

Posted at Jun 18 2012 06:59 AM | Updated as of Jun 19 2012 12:55 AM

MANILA, Philippines - Fiscal authorities are expected to make yet another pitch for a credit rating upgrade in their meeting today with members of a review team from Moody’s Investors Service.

The team is in the Philippines to assess the country’s economic fundamentals and see whether the country is indeed ripe for a credit rating upgrade.

Finance Undersecretary Jeremias Paul Jr., Bureau of Internal Revenue Commissioner Kim Henares and Bureau of Customs Commissioner Ruffy Biazon will be meeting with the team from Moody’s.

Bangko Sentral ng Pilipinas Investors Relations Service chief Claro Fernandez and other BSP executives will also be leading the discussions.

The Moody’s visiting team would be headed by lead analyst Christian De Guzman.

The discussions, according to the documents, will focus on efforts made in the area of fiscal consolidation and debt reduction as well as progress made in improving the country’s investment environment.

Moody’s, for its part, has said that the country’s credit rating could be upgraded on continued strength of the balance of payments and the health of the financial system as well as fiscal consolidation and debt reduction.

It earlier upgraded the country’s outlook to positive from stable.

During the meeting, fiscal officials are also expected to highlight the passage of the sin tax measure by the House of Representatives.

The House approved a substitute excise tax bill that would effectively raise taxes on alcohol and cigarettes.

There were 46 votes in favor of the measure as against 14 who opposed it.

Under the substitute bill, there will be three tiers for distilled spirits and fermented liquor while cigarettes will have two tiers. Indexation of sin taxes, meanwhile, will be eight percent for every two years.

The amended sin tax measure is expected to translate to P33 billion in additional yearly revenues instead of P60 billion as was expected from the original bill authored by Cavite Rep. Joseph Abaya.

The Philippines is currently rated one notch below investment grade by Fitch Ratings, while Standard & Poor’s Rating Services and Moody’s Investors Service rate it two notches below investment grade.