(Updates with Abad’s comments in third paragraph.)
Sept. 29 (Bloomberg) -- The Philippines may achieve investment grade ranking as early as next year after credit rating companies signaled they were “satisfied” with the country’s deficit-reduction progress, Budget Secretary Butch Abad said.
Finance Secretary Cesar Purisima and central bank governor Amando Tetangco were among officials who met with analysts from Standard & Poor’s, Moody’s Investors Service and Fitch Ratings in the U.S. last week, Abad said in a televised briefing in Manila today. They told the ratings companies that this year’s budget shortfall will be within the 300-billion pesos ($6.9 billion) cap, he said.
“From the way they were fielding their questions, they seem very satisfied with the developments both in terms of the country’s monetary policy and fiscal consolidation program,’ Abad said. “There is a good chance that we may be able to get that investment grade that has eluded us for some time.”
President Benigno Aquino won credit rating upgrades from Fitch and Moody’s this year after taking steps to narrow the budget deficit from a record in 2010. The government is counting on higher rankings to lower borrowing costs, giving it more funds to build roads, bridges and hospitals to bolster growth to as much as 8 percent annually from 2011.
Fitch raised the country’s debt rating to BB+ on June 23, bringing it to one step below investment grade. Earlier that month, Moody’s upgraded the Philippines to Ba2, the highest level since the start of 2005. S&P increased the nation’s rating to the second-highest non-investment grade in November.
Philippine officials assured the ratings companies that improving revenue collections and “prudent spending” mean that the country doesn’t need new or higher taxes, Abad said.
The government had a budget surplus in August, helping narrow the eight-month shortfall to 34.5 billion pesos from 228.104 billion pesos in the same period in 2010.
--With assistance from Cecilia Yap in Manila. Editors: Shamim Adam, Clarissa Batino
To contact the reporter on this story: Joel Guinto at firstname.lastname@example.org; Karl Lester M. Yap in Manila at email@example.com
To contact the editor responsible for this story: Stephanie Phang at firstname.lastname@example.org