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Business

RP moves to avert rating downgrade

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The government is trying to avert a downgrade by international credit rating agencies such as Standard and Poor’s (S&P) and Moody’s Investor Service by taking on a proactive pitch to assure rating firms that its prospects still look good, even with the anticipated deterioration of the global economy following the terrorist attacks in the US.

Yesterday, the country’s economic team led by Finance Secretary Jose Isidro Camacho held the second in a series of teleconferences with credit rating agencies. Camacho briefed S&P about the country’s fiscal and monetary positions and its responses to the US attacks. Last Monday, rating firms Fitch IBCA and Japanese Research and Investment Agency were updated on key economic concerns.

Tomorrow, Moody’s is scheduled for a teleconference briefing. S&P and Moody’s, reputed to be the most conservative ratings firms, usually downgrade a country’s credit outlook and rating after a crisis. They have sent signals to emerging markets that they could consider a credit ratings downgrade as a result of the economic fallout after the US attacks.

Camacho admitted the credit rating firms are concerned about the growth prospects of emerging markets such as the Philippines since the US is its biggest trading partner.

"Of course there was concern, among them is over our ability to access external financing but we assured them that this year’s financing has already been fully funded and we are already in the advanced stages of being able to pursue credit-enhanced transactions," Camacho said.

Camacho said the Philippine government also assured credit rating firms of its success in managing the fiscal deficit and despite the bleak outlook, it is confident about meeting this year’s growth targets.

"We want to show them that we have anticipated the potential issues or concerns that they may raise following the Sept. 11 attacks, and we want them to know we’re pretty much on track," Camacho said.

Camacho said the Philippines won’t be affected by a downgrade since this year’s funding requirements are already covered.

"Technically, it will have no impact because we are not planning on further external borrowing. It will however, tend to affect our future financing requirements because it could raise the cost of borrowing," Camacho said.

The government is still reeling from the earlier decisions of rating firms to downgrade the country’s outlook from neutral to negative in the wake of last year’s political crisis and the threat to the Arroyo administration by supporters of imprisoned president Joseph Estrada. Rocel Felix

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CAMACHO

CREDIT

FINANCE SECRETARY JOSE ISIDRO CAMACHO

INVESTOR SERVICE

JAPANESE RESEARCH AND INVESTMENT AGENCY

JOSEPH ESTRADA

LAST MONDAY

P AND MOODY

RATING

ROCEL FELIX

STANDARD AND POOR

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