S&P raised the Philippines’ debt rating on Friday, making it the first ratings upgrade for the Aquino administration.

Mr. Aquino, who is attending the Asia Pacific Economic Cooperation (APEC) Leaders’ Summit here, told reporters Friday that his administration was “very delighted” to realize that its efforts to improve the economy were already being recognized by reputable groups like S&P.

“And of course we would want it to go even higher but that is already cause for us to be delighted with the results, we have gotten a level up, when we have been in the doldrums for such a long time,” he said.

The President said he could understand that credit ratings agencies were being cautious in the light of the housing issue in the United States where the accuracy of their ratings was questioned.

But he said more credit ratings upgrade would be forthcoming.

S&P raised the country’s credit rating to ‘“BB,’” a notch higher than its previous rating of ‘“BB-.’”

S&P attributed the ratings upgrade to the country’s strong external liquidity, growth prospects and improving debt ratios.

The one-notch ratings upgrade brings the Philippines to two levels below the “investment grade” – a grade that Indonesia and Vietnam currently hold.

Credit rating agencies came under fire for allegedly understating the risks involved in various new and complex mortgage-backed securities and collateralized debt obligations introduced in the US. Their inaccurate prognosis eventually led to the bursting of the US housing bubble and the global financial crisis of 2008.

Better tax collection

Malacañang, meanwhile, vowed yesterday to pave the way for better credit rating for the country through improved tax collection, budget reforms and the tougher fight against corruption.

“(The government will) increase revenues through intensified tax collection. (We will) control government expenditures through reformist zero-based budgeting,” Presidential Communications Operations Office Secretary Herminio Coloma told The STAR in a test message.

“As a result, fiscal deficit will be reduced. This is the basis of rating agencies’ assessment of our economy’s overall performance,” he added.

Coloma also highlighted the need for good governance and for tougher measures against corruption.

“Underlying these (measures) is ongoing anti-corruption and good governance campaign,” he said.

Malacañang said S&P’s upgrade showed the global community’s growing confidence in the Philippine economy.

“We are delighted at the increase in the credit rating (of the Philippines). It shows that our efforts to restore the confidence in the economy are on track,” deputy presidential spokesperson Abigail Valte said in an interview with radio station dzRB.

“This is what we call sign of renewed confidence in the economy. This will spur us on in continuing to improve our economy,” she added.

Officials expect the budget deficit to reach P325 billion by yearend.

The budget gap was at P259.8 billion as of September mainly due to lower than expected revenues.

The Finance department, however, remains confident that this year’s shortfall would fall within the P325-billion target.

The Budget department, on the other hand, is adopting a zero-based budget approach, which required state agencies to justify the increases over the previous year’s allocation. The approach seeks to ensure that the priority programs of the administration would be given sufficient funding.

The government has also started looking into the incentives of officials of state-owned firms as part of the measures to promote prudent spending.

Aurea Calica, Philippine Star