Philippines keeps its credit rating, indicating capacity to pay debts

MANILA, Philippines - The Philippines kept its positive credit rating outlook, indicating its capability to pay for its obligations owing to its “resiliency," a US-based ratings agency said. The Southeast Asian nation has demonstrated “a remarkable degree of resiliency," Moody’s Investor Service said, after the company completed its review mission last month. However, to further enhance its credit standing, Moody’s will continue monitoring whether the country’s ratings will hold, especially with the expected decline of remittances this year. Moody’s outlook remained positive on the Philippines’ B1 foreign and local currency government ratings, the Ba3 country ceiling for foreign currency bonds and B1 country ceiling for foreign currency bank deposits. For several years, the country has kept Moody’s “stable" outlook until it received a positive rating in January last year. The Philippines was able to preserve gains incurred in improving its external payments and fiscal fundamentals. "The Philippines' balance of payments and banking system have held up well to the global inflationary and credit market shocks of 2008, thereby placing the country's external payments in a strengthened position to cope with the stresses likely to be encountered in 2009," Tom Byrne, a Moody's Senior Vice President, said in a statement. “The improving trend in external debt service capacity will pause but it may not deteriorate," the same statement added. Byrne also underscored the importance of keeping the peso stable since it will contain debt payments. More than 50 percent of the government’s obligations are denominated in foreign currency. As a result, Byrne expects increased spending for infrastructure programs as subsumed in the national budget. The positive rating was also a kind of reward for Manila’s move to spend more – and thereby incur a larger deficit – instead of balancing the budget next year. "Moody's considers that the government's intention to increase the national government deficit only moderately in 2009 would not necessarily permanently reverse the improving trend in the government's debt metrics," Byrne said. - GMANews.TV