S&P review team to assess RP fiscal situation

MANILA, Philippines – A review team from Standard & Poor’s met yesterday with Finance officials to assess the government’s fiscal situation and discuss the plans of the Aquino administration in addressing a widening budget gap.

Finance Undersecretary Gil Beltran said before the meeting that discussions were expected to center on the country’s fiscal health and measures taken by the Aquino administration so far to improve revenues.

“There will probably be discussions on the plans of the new administration,” Beltran said.

However, he said that rating agencies do not categorically recommend tax increases but instead leave this up to the respective administration to decide.

The Aquino administration vowed not to slap new taxes and instead committed to exhaust all measures first to improve the revenue stream.

The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) are expected to brief the rating agency representatives on initiatives that are now being undertaken to boost revenues.

For his part, Customs Commissioner Angelito Alvarez said before the meeting with S&P officials that he would be reporting on the revenue-enhancement measures being implemented in the agency.

These include the filing of cases against smugglers every other week, he noted.

Both the BIR and the BOC have been filing cases against tax evaders and smugglers, alternatively, before the Department of Justice (DOJ). The move is meant to send a message to the public that the two revenue agencies are stepping up efforts to fight tax cheats.

The BIR, for its part, has also been implementing its own campaign by ordering the closure of establishments that are not fulfilling their tax obligations.

Aside from the S&P review team Moody’s Investors Service is also scheduled to do its own review from November 8 to 11, the country’s Investor Relations Office chief Claro Fernandez earlier said.

The Aquino administration’s economic team led by Finance Secretary Cesar Purisima and Budget Secretary Florencio Abad has been convincing credit rating agencies to visit the Philippines again to assess the efforts of the new government.

Fitch Ratings may also send a review team in January, Fernandez said.

Once the review teams are done with their assessment, Fernandez said that a credit rating action might come immediately or within a few months.

Abad has said that the Philippines is ripe for an upgrade, as it has been implementing reforms such as prudent spending and enhancement in tax administration.

The government has also been more transparent with its spending activities and revenues. Furthermore, Abad said the government plans to cut the country’s debt-to-gross domestic product (GDP) ratio to drop to 47 percent from 57 percent in 2009 and the projected 58 percent in 2010.

The government’s budget deficit was recorded at P259.8 billion from January to September, 9.4 percent more than the P237.5 billion recorded a year earlier. In September alone, the government’s deficit stood at P31.7 billion, wider than the P27.5 billion recorded in the same month last year.