PHILIPPINE STAR - January 09, 2009

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BSP chief sees no ratings downgrade

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said he does not expect an outlook or ratings downgrade this year despite the difficulties to be faced by the economy in the wake of the global slowdown.

Fitch Ratings earlier said it was retaining its “stable” outlook on the Philippines, while other countries have been put on negative watch because of the effects of the US financial crisis and the ensuing economic recession.

Tetangco expressed optimism that the same sentiment is likely to carry across to the other credit ratings agencies as they evaluate the country’s prospects this year.

“I think the Fitch move to keep our outlook stable is a general view among other rating agencies,” Tetangco said. “I think we’ll do okay as long as we keep on track.”

However, he added this would depend on government actions in the coming months and how regulators would be able to implement the economic stimulus plan.

“It all depends on how we will handle the challenges,” Tetangco said. According to him, the implementation of the economic stimulus plan would be critical to stable ratings, regardless of whether the government spends more than the 2009 prescribed budget or net.

There have been criticisms that the Arroyo administration’s P300-billion plan would not be enough since it has already been in the 2009 budget since before the crisis became into a full-blown meltdown.

But Tetangco said he was less concerned with the amount allocated by the government than with its capacity to actually implement the programs and spend the money.

“The important issue is for the money to be spent, it doesn’t matter if it is not new money,” Tetangco said. “It is the money that you are spending that would create economic activity and generate growth.”

London-based Fitch Ratings said earlier it was maintaining its stable outlook on the Philippines, saying that the country was “reasonably healthy” despite the tumult in the global economy.

Tetangco said Fitch’s decision indicates confidence on the country’s ability to weather the global slowdown, even a recession in its major trading partners.

A stable outlook means that the Philippines would stay at its current credit ratings until the next Fitch review.

Fitch managing director James McCormack singled out the Philippines, along with China and Indonesia, as the only countries that were not in Fitch Ratings’ negative watch.

Tetangco said Fitch’s action affirmed the view of moentary officials that the country’s strong external position would support its fundamental stability through the gloom of the global economic slowdown.

“The Philippines is still reasonably healthy, public finance is well-managed in the last couple of years,” McCormack said, adding that weaker growth in the region was not necessarily negative from a sovereign creditor’s perspective.