By IRIS C. GONZALES
The Philippine Star
US-based Moody’s Investors Service has raised concerns on the government’s dependence on privatization as a means to raise revenues, warning that this may not be sustainable.
Moody’s representatives are in the Philippines as part of its review of the country’s economic situation, particularly the monetary and fiscal environments.
Representatives of the debt watcher had the first of its series of meetings with government officials Wednesday and noted the country’s strong emphasis on privatization.
"It’s the usual thing. They (Moody’s) are concerned with sustainability over the medium-term. They are saying that we cannot go on privatizing forever and that if we want a stream of revenues to finance on a continuing basis infrastructure projects in the future, we should get it from tax revenues," a government source said.
Proceeds from privatization of state-owned assets has reached an all time high of P90 billion as of end-November.
In November alone, the Philippines recorded its highest ever monthly budget surplus of P54.1 billion, putting the budget surplus for the first 11 months of 2007 at P12.7 billion, against a shortfall of P55.1 billion a year ago. The targeted surplus for November was P2.725 billion.
The government attributed the surplus to the sale of its stake in PNOC-Energy Development Corp. (PNOC-EDC) last November for P58.5 billion, of which P47 billion went to state coffers.
Without the proceeds from the PNOC-EDC, the government would have recorded a budget deficit of P35 billion from January to November.
Sought for comment on Moody’s concerns on the government’s focus on privatization, Finance Undersecretary Gil Beltran said fiscal authorities are addressing the problem.
"We are doing something about it…We cannot sustain especially the growth in infrastructure if the tax effort is low," Beltran said.
Moody’s, considered as the most pessimistic among rating agencies looking into the Philippines, also wants to know whether the government would be able to deliver on its commitment to balance the budget by the end of this year, officials said.
The debt watcher’s last credit action on the Philippines was in November 2006 when it raised its sovereign credit outlook on the country to stable from negative as it cited progress on government efforts to tame the budget deficit.
At present, the Philippines is rated ‘B1’ by Moody’s, four notches below investment grade.
This rating is one notch below Standard & Poor’s ‘B-’ rating and two notches below Fitch Ratings ‘BB’ grade.
The Philippine StarUS-based Moody’s Investors Service has raised concerns on the government’s dependence on privatization as a means to raise revenues, warning that this may not be sustainable.
Moody’s representatives are in the Philippines as part of its review of the country’s economic situation, particularly the monetary and fiscal environments.
Representatives of the debt watcher had the first of its series of meetings with government officials Wednesday and noted the country’s strong emphasis on privatization.
"It’s the usual thing. They (Moody’s) are concerned with sustainability over the medium-term. They are saying that we cannot go on privatizing forever and that if we want a stream of revenues to finance on a continuing basis infrastructure projects in the future, we should get it from tax revenues," a government source said.
Proceeds from privatization of state-owned assets has reached an all time high of P90 billion as of end-November.
In November alone, the Philippines recorded its highest ever monthly budget surplus of P54.1 billion, putting the budget surplus for the first 11 months of 2007 at P12.7 billion, against a shortfall of P55.1 billion a year ago. The targeted surplus for November was P2.725 billion.
The government attributed the surplus to the sale of its stake in PNOC-Energy Development Corp. (PNOC-EDC) last November for P58.5 billion, of which P47 billion went to state coffers.
Without the proceeds from the PNOC-EDC, the government would have recorded a budget deficit of P35 billion from January to November.
Sought for comment on Moody’s concerns on the government’s focus on privatization, Finance Undersecretary Gil Beltran said fiscal authorities are addressing the problem.
"We are doing something about it…We cannot sustain especially the growth in infrastructure if the tax effort is low," Beltran said.
Moody’s, considered as the most pessimistic among rating agencies looking into the Philippines, also wants to know whether the government would be able to deliver on its commitment to balance the budget by the end of this year, officials said.
The debt watcher’s last credit action on the Philippines was in November 2006 when it raised its sovereign credit outlook on the country to stable from negative as it cited progress on government efforts to tame the budget deficit.
At present, the Philippines is rated ‘B1’ by Moody’s, four notches below investment grade.
This rating is one notch below Standard & Poor’s ‘B-’ rating and two notches below Fitch Ratings ‘BB’ grade.