, February 18, 2005
(STAR) Malacañang Friday contended that at least 40 established foreign banks have called Moody’s Investor Service two-notch downgrade of the country’s ratings as rather excessive.

Press Secretary Ignacio Bunye revealed this development this morning in radio interviews, where he also cited the foreign banks’ vote of confidence on the Arroyo government.

"Moody’s rating is far from the truth," Bunye quoted the banks as saying.

Among the foreign banks the Press Secretary cited were the UBS, Hong Kong and Shanghai Bank, and Standard Chartered Bank which gave positive feedbacks on the Philippine economy’s performance and prospects.

Bunye likewise cited the report of the Japanese rating agency Research and Investment Information, Inc (R&I) which rated the country’s credit status in the same period Moody’s did its rating downgrade.

R&I rated the country’s sovereign debt and credit instruments as investment grade.

Moody’s rating was obviously off the mark, he said in Filipino.

Bunye likened the credit rating agencies to judges in a boxing match whose opinions could differ.

He also expressed his doubts on Moody's rating downgrade, which he said may have been timed and calculated to pressure Congress into approving the proposed revised Vale Added Tax (VAT) measure.

Moody’s, in its latest credit rating report on the Philippines, has lowered the country’s foreign currency rating for government bonds from B1 to B2.

Bonds that are rated B are generally considered unattractive investment papers, with poor interest and principal payment prospects.

RP to bounce back from negative to positive in next rating: Palace (STAR) 02/18 10:34:03 AM

Malacañang Thursday expressed confidence the country will bounce back from negative to positive in the next ratings.

"In the next rating, we believe we will come out positive," Press Secretary Ignacio Bunye said in a radio interview, citing the stock market’s continuing to surge despite last Wednesday’s two-notch downgrading of the Philippines’ credit rating by Moody’s Investors Service.

He pointed out that when the credit rating was conducted, the administration’s fiscal reform proposals were still being discussed.

"But now Congress is working on our fiscal reform measures," he added.

Bunye pointed out that just as important as the fiscal reform program are efforts to implement tax reforms, upgrade the tax collection system, putting an end to wasteful spending, and a relentless campaign against corruption.

He underscored the importance of the Filipino people uniting and working together to eradicate corruption in all levels and sectors of society to "convince international observers that we are serious about putting our own house in order."

Bunye doubted claims that Moody’s downgrade of the country’s credit rating was calculated to pressure Congress into approving the Valued Added Tax (VAT) bill.

Members of Congress understand that "we have to take some bitter pills. All of us have a part to play -- Congress, the executive department and the whole citizenry," he stressed.

Bunye said "well-meaning debate on the VAT" is welcome, pointing out that it is important that the different views on the measure are heard.

"But at the end of the day, we have to come up with some sort of a VAT system, an expanded VAT system," he said.

He explained that savings from the austerity program and additional tax revenue realized from an upgraded tax collection system would not be enough to cover the government’s urgent fiscal and development programs.

The government’s revenue target from its fiscal reform measures has been placed at 80 billion pesos.

The 25-30 billion pesos projected revenues from the tax measures already passed by Congress, including the "sin taxes," austerity program and improved tax collection fall far short of the 80-billion pesos target.

Reported by: Sol Jose Vanzi

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