RP  TO SPEED UP REFORMS IN BID TO REVERSE CREDIT RATINGS DOWNGRADE

MANILA, January 19, 2005 (STAR) By Marichu A. Villanueva - Malacañang said yesterday it will speed up reforms, including passage of fresh tax laws, in a bid to reverse a sovereign credit ratings downgrade by Standard and Poor’s.

Presidential Spokesman Ignacio Bunye said the reforms which could lead to a turnaround this year would come with a combination of new tax laws and administrative measures which would generate as much as P180 billion this year.

"This rating catches us in the midstream of urgent reforms and we are confident it will be reversed in full recognition of our comprehensive fiscal program," Bunye said.

"We shall continue to work hard with Congress on new taxes and push administrative measures to raise revenue and cut waste in government," he vowed.

Bunye expressed yesterday President Arroyo’s disappointment with the latest S&P credit ratings downgrade over the government’s perceived failure to shore up its shaky public finances.

"We must strike up the tempo of reforms, keep our sights focused and our energies high for the work ahead," Bunye said, adding that "our global competitiveness will be sustained by greater political and economic security."

Bunye, in an official statement right after S&P released its official announcement last Monday, said S&P proceeded with its previous warning to downgrade the sovereign credit rating even after the Philippine government had already instituted several drastic fiscal reform measures through administrative measures while waiting for Congress to approve the other pending tax bills.

"We are confident that the S&P will revisit our rating and consider reversing the downward action once they have a complete understanding of the government’s significant achievements to raise revenues and contain the future impact of losses of National Power Corp. (Napocor), through successful privatization, and rate increases," Bunye said.

Despite this downgrade, Bunye echoed the optimism of the Arroyo administration to convince S&P later to revise its outlook.

"We believe the stable outlook could well be revised to positive in the next six to 12 months," Bunye said.

"Our respectable fiscal performance and healthy growth in 2004 support strong ratings," Bunye pointed out.

"We know that substantial progress, particularly on the fiscal front must be made to regain confidence. We are on a clear path to achieving these actions," Bunye pointed out.

"It is a big thing that our investors see our political will to do these reforms for our country, for our economy," President Arroyo pointed out.


Reported by: Sol Jose Vanzi

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