Fitch Ratings gave the Philippines a Stable Outlook in its last
ratings report released last June. The rating agency credited
the favorable rating to last year’s P147.1 billion fiscal
deficit (4.0% of GDP), only a shade above the P145 billion target
set for the period. For 2002, however, the credit rating institution
believes the country “will be hard pressed to hold the
deficit much below P155 billion (3.9% of GDP)” given a
versus the original programmed shortfall of P130 billion.
Even if public spending is cut by 5%, Fitch
estimates that the deficit will rise to 4.3% of GDP (P170.9
billion), surpassing the 2001 record. Controlling the fiscal
deficit, however, to P150-P155 billion will be within tolerable
rating limits. Otherwise, a resulting depreciation of the
foreign exchange rate of up to P54/US$ will raise the public
debt-to-GDP ratio back to the 2000 level of 65.6%.
Fitch Ratings outlook for the country might
fall to negative should the administration go soft on fiscal
discipline a year before the 2004 presidential election. Thus,
“government has a limited window of opportunity to bring
public finances back on track, if it is to avoid some difficult
political choices in 2003 and some unwelcome rating developments.”
in
credit card debts in December 2001. Monetary authorities want
to bring this level down to 15%-17%.
