Better revenue collection to increase Phl chances for investment grade rating

MANILA, Philippines - The government’s ability to sustain its revenue collection momentum would greatly increase the country’s chances of obtaining an investment grade rating, GlobalSource said in its latest report on the Philippines.

“Looking ahead, it will thus be interesting to see how well the government is able to sustain its revenue collection momentum,” GlobalSource said.

The New York-based think-tank also said that global debt watchers would also be looking at how fast dollar remittances from overseas Filipino workers can grow given the problems in countries that host them. These include the United States and countries in the Middle East and Europe.

Furthermore, GlobalSource said investors and global debt watchers would also be keeping a close watch on the government’s anti-corruption efforts.

“How convincingly the current administration can project to investors that it is moving towards solving long-time problems of corruption and poor governance,” it said.

On Wednesday, Moody’s Investors Service upgraded the country’s credit rating to Ba2 from Ba3, the highest rating since 2005.

The global debt watcher credited the country’s “improved fiscal position, healthy external accounts, and relative macroeconomic stability as grounds for the upgrade,” GlobalSource said.

The government has reported a budget surplus of P61 million in the first four months of the year on the back of improved revenue collections and prudent spending.

Disbursements during the period fell by close to 12 percent while revenue collections grew 18 percent, latest government data showed.

However, GlobalSource said that although a Ba2 is the country’s highest foreign currency rating since February 2005, “it is still a rung below Indonesia’s, and still falls short of the highest rating the country achieved of just a notch below investment grade during the Ramos presidency in 1997 and which was in place until the beginning of 2004.”

Moody’s said the country should further reduce debt and maintain a healthy balance of payments for its credit rating to be closer to investment grade.