“Honestly, I am not very optimistic. (The slow growth) is very, very worrying,” Nelson told reporters in a recent briefing.
Philippine gross domestic product expanded by 3.7 percent last year, from 7.6 percent in 2010, weighed down by weak global demand, according to the National Statistical Coordination Board.
The Aquino administration seemed too focused on a credit rating upgrade instead of developing new areas of growth to meet the needs of Philippines’ growing population, said Nelson.
Finance Secretary Cesar Purisima noted in a statement late Tuesday that international credit rating agencies “are very keen on our push for reforms in… sin taxes.”
His statement runs counter to the position of the tobacco industry against raising or creating new taxes on tobacco and liquor products.
The Finance chief also cited World Bank estimates that the country “could gain as much as 1.3 percent of GDP in additional revenues from reforms in… sin taxes like uniform tax rates and indexation.”
Dialog with rating agencies
“We hope to see more public spending,” Nelson said, urging Philippine officials to get crucial infrastructure projects going.
Credit ratings gauge a country’s debt service ability, a measure that is closely monitored by investors.
Purisima is currently in London, where he met with representatives of Fitch Ratings and Moody’s Investor Service on prospects for a Philippine credit rating upgrade.
“I met with them to continue our dialogue on the strength and resiliency of the Philippine economy, as well as to discuss our view that the Philippines continues to be underrated,” said Purisima.
The latest Philippine credit ratings from Fitch (“BB+”), Moody’s (“Ba2”), and Standard & Poor’s (“BB”) are all below investment grade.
The Philippines deserves an investment grade rating, said Purisima, adding that market investors recognize the Philippine economy’s resilience.
“In fact, our bond issuance in January marked the lowest US dollar coupon ever achieved by an Asian sovereign for a bond with a tenor greater than ten years,” the Finance chief noted.
The Philippines last month raised $1.5 billion selling global bonds at 5 percent coupon rate. (GMA News)
By: Lucell Larawan
By: Alex P. Vidal
By: Juan L. Mercado
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