Fiscal gains to depend on next administration

Improvements in the Philippines’ fiscal standing will depend on whether the next administration pursues current plans to balance the budget and trim debt, economic managers told visiting Standard & Poor’s Ratings Service officials. The S&P team, Finance Undersecretary Gil S. Beltran said, met with officials from the Finance department, Treasury bureau and National Economic and Development Authority on Monday for an outlook on the country’s finances two years from now. "We told them we don’t know [if the next administration will change policies], but Secretary [Margarito B.] Teves told them that in the Philippines, administrations are usually centrists and fiscally conservative. No one implements extremist policies. We’ve also never repudiated our debt," he pointed out. The government officials present during Monday’s meeting, Beltran said, highlighted plans to balance the budget and reduce debt to about 49.6 percent of the gross domestic product (GDP) by 2013. The budget deficit hit a record P298.5 billion last year while the debt to GDP ratio was 56 percent. "That was the medium-term fiscal program we presented, but that will have to be reviewed by the next administration. We cannot say for sure that it will be it," he said. While the S&P team cited improvements in the country’s fiscal situation, Beltran said it was still low compared with its regional peers. "Our debt ratio is still higher than [our] neighbors’ 35-45 percent of GDP. Our tax revenues are only 12.7 percent of GDP compared [with] 15-16 percent in the region," he said. Beltran added that economic managers had also presented plans to increase infrastructure spending to about 3.9 percent of GDP by 2012 from about 3.6 percent this year to bring the country’s capital outlay closer to what other countries in the region spend, which is about 5 percent. He said they had also pointed out the fact that the Philippines was among the few economies that continued to grow amidst the global economic slump. "[The S&P] team told us they understand the Philippines’s situation, which is why even during the crisis they did not cut or downgrade our ratings," he added. Asked if the country could expect an upgrade, Beltran said: "We just presented a report but we are not requiring them to do anything. It’s up to them to make this decision, but we highlighted that the economy is on a strong foundation even in a most difficult time." S&P in January affirmed its BB- rating — three notches below investment grade — on Philippine debt. The S&P delegation also met with private sector representatives on Tuesday and is scheduled to leave today after speaking with central bank officials. — BusinessWorld