MOODY'S URGING RP TO WORK ON BALANCING BUDGET
MANILA, JANUARY 28, 2009 (STAR) By Iris C. Gonzales - United States-based Moody’s Investors Service cautioned the government on its plan to boost spending during these difficult times, saying that the Philippines should still work towards balancing the budget when the environment improves, Finance Secretary Margarito Teves yesterday said.
Moody’s representatives led by senior vice president Thomas Byrne met with Teves on Monday, the first in a series of meetings with other key government officials for the debt watcher’s assessment of the country’s credit ratings.
Teves said that while Moody’s supports the government’s plan to spend more to pump-prime the economy this year in the wake of the global financial turmoil, it urged the government to remain committed to wiping out its budget deficit when the situation improves.
The government has programmed to incur a deficit of P102 billion this year, higher than the original deficit ceiling of P60 billion for 2009. It has also programmed to post a balanced budget in 2010.
“Their concern is that we don’t lose track of our direction, our commitment towards fiscal consolidation when the situation becomes more favorable,” Teves said.
Teves said that during the meeting, representatives of the credit rating agency understood the government’s need to spend more.
“There was a consensus that we can be more flexible in our approach towards a balanced budget. The external environment has been unfavorable and harsh so the direction is really to do some spending, more than what we had anticipated. And this could result in a higher deficit this year,” Teves said.
Teves said that the additional spending would be used to fund infrastructure projects aimed at boosting the domestic economy.
During the meeting with Teves, Moody’s officials also asked the government officials whether the country can still balance the budget in 2010.
“They asked if is still achievable. I said I’m not closing the doors because a lot of things can happen,” Teves said.
In January 2008, Moody’s raised its outlook on the country’s key ratings to positive from stable, citing progress in government efforts to stabilize public sector finances.
The affected ratings include the B1 long-term government foreign- and local-currency ratings, the B1 foreign-currency bank deposit ceiling and Ba3 foreign currency country ceiling. Moody’s B1 rating is four notches below investment grade.
Chief News Editor: Sol Jose Vanzi
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