Moody's sees Philippine fiscal consolidation continuing in 2012
The gains made by the Philippines on fiscal reforms and debt reduction last year will likely continue this year, New York-based Moody’s Investors Service said in a report Monday.
“We expect tax revenues to continue improving owing to administrative measures to further enhance compliance, and a legislative agenda that aims to increase certain excise taxes and reduce extraneous fiscal incentives for investment,” said Moody’s assistant vice president and analyst for Sovereign Risk Group Christian de Guzman.
De Guzman’s comments were part of the credit rating agency’s weekly outlook, “Philippine Fiscal Results Point to Continued Debt Reduction.”
New budgeting rules and procurement processes should guard against underspending and ensure that government spending supports economic growth, the Moody’s official noted.
“Although we expect the fiscal deficit to widen slightly to 2.4 percent of GDP from two in 2011, the deficit will still be in line with the government’s medium-term fiscal program to 2016,” he said.
Higher tax collections in the absence of new taxes reflect a highly visible tax enforcement program that spurred greater compliance for personal and corporate income taxes collected by the Bureau of Internal Revenue (BIR), according to the Moody’s report.
It noted a solid increase in non-tax revenues driven largely by higher remittances of profits by government-owned and -controlled corporations.
“We expect tax revenues to continue improving owing to administrative measures to further enhance compliance, and a legislative agenda that aims to increase certain excise taxes and reduce extraneous fiscal incentives for investment,” he said.
The Philippines shaved its budget deficit by 37.11 percent to P197.754 billion or 2 percent of gross domestic product (GDP) last year from P314.458 billion or 3.5 percent of GDP in 2010, Department of Finance (DOF) data showed.
PHL debt reduction intact
The deficit was P102.246 billion narrower than the P300 billion or 3 percent of GDP on program.
Revenue collections grew by 12.6 percent to P1.36 trillion last year from P1.21 trillion. They were P51.4-billion lower than the P1.41-trillion goal.
Expenditures rose by 2.3 percent to P1.56 trillion from P1.52 trillion, or P153.6-billion lower than the P1.71-trillion ceiling.
The country’s debt-to-GDP ratio would likely decline this year and beyond, reflecting a favorable debt trajectory, according to Moody’s.
“Consequently, the debt reduction that began in 2005 is intact and is credit positive,” said De Guzman.
Government’s debt management, including buybacks and swaps in the past 18 months, was key to the fiscal and debt consolidation through cost savings, the Moody’s assistant vice president noted.
“With an improved credit profile and stable inflation, new government debt issuance now also commands lower interest rates,” De Guzman added.
As such, he said interest payments of the Philippines fell 5.2 percent last year on its debt.
The ratio of interest payments to total revenues fell to 20.5 percent last year from as high as 36.8 percent in 2005, which showed the country’s degree of fiscal flexibility continued to increase, De Guzman added. — VS, GMA News
“We expect tax revenues to continue improving owing to administrative measures to further enhance compliance, and a legislative agenda that aims to increase certain excise taxes and reduce extraneous fiscal incentives for investment,” said Moody’s assistant vice president and analyst for Sovereign Risk Group Christian de Guzman.
De Guzman’s comments were part of the credit rating agency’s weekly outlook, “Philippine Fiscal Results Point to Continued Debt Reduction.”
New budgeting rules and procurement processes should guard against underspending and ensure that government spending supports economic growth, the Moody’s official noted.
“Although we expect the fiscal deficit to widen slightly to 2.4 percent of GDP from two in 2011, the deficit will still be in line with the government’s medium-term fiscal program to 2016,” he said.
Higher tax collections in the absence of new taxes reflect a highly visible tax enforcement program that spurred greater compliance for personal and corporate income taxes collected by the Bureau of Internal Revenue (BIR), according to the Moody’s report.
It noted a solid increase in non-tax revenues driven largely by higher remittances of profits by government-owned and -controlled corporations.
“We expect tax revenues to continue improving owing to administrative measures to further enhance compliance, and a legislative agenda that aims to increase certain excise taxes and reduce extraneous fiscal incentives for investment,” he said.
The Philippines shaved its budget deficit by 37.11 percent to P197.754 billion or 2 percent of gross domestic product (GDP) last year from P314.458 billion or 3.5 percent of GDP in 2010, Department of Finance (DOF) data showed.
PHL debt reduction intact
The deficit was P102.246 billion narrower than the P300 billion or 3 percent of GDP on program.
Revenue collections grew by 12.6 percent to P1.36 trillion last year from P1.21 trillion. They were P51.4-billion lower than the P1.41-trillion goal.
Expenditures rose by 2.3 percent to P1.56 trillion from P1.52 trillion, or P153.6-billion lower than the P1.71-trillion ceiling.
The country’s debt-to-GDP ratio would likely decline this year and beyond, reflecting a favorable debt trajectory, according to Moody’s.
“Consequently, the debt reduction that began in 2005 is intact and is credit positive,” said De Guzman.
Government’s debt management, including buybacks and swaps in the past 18 months, was key to the fiscal and debt consolidation through cost savings, the Moody’s assistant vice president noted.
“With an improved credit profile and stable inflation, new government debt issuance now also commands lower interest rates,” De Guzman added.
As such, he said interest payments of the Philippines fell 5.2 percent last year on its debt.
The ratio of interest payments to total revenues fell to 20.5 percent last year from as high as 36.8 percent in 2005, which showed the country’s degree of fiscal flexibility continued to increase, De Guzman added. — VS, GMA News
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