Officials trumpet gains to visiting S&P team

The Aquino administration’s fiscal team trumpeted gains made in the area of debt management and tax administration to a visiting team from global debt watcher Standard & Poor’s.

Finance officials including National Treasurer Roberto Tan and Finance Undersecretaries Jeremias Paul Jr. and Rosalia de Leon met with S&P representatives in a meeting late Monday, kick-starting a series of meetings between S&P and other government officials including monetary authorities.

During the meeting, officials presented the country’s improving fiscal position in response to S&P’S questions on the government’s debt position.

Tan said the meetings would help the credit rating team have a better picture of the country’s fiscal profile.

“I think it was a very constructive meeting with important questions on the domestic capital market and debt position of the country answered. I am optimistic that the S&P delegation will leave with a favorable impression of the Philippine credit picture,” Tan said.

During Monday’s meeting, the S&P team also sought for updates on measures to raise revenues including the status of the proposed sin tax measure which is pending in Congress.

The government is pushing for House Bill 5757, authored by Cavite Rep. Joseph Emilio Abaya. The measure, currently pending at the House Ways and Means Committee, calls for the adoption of a unitary tax system for tobacco and liquor and indexation of taxes to inflation.

In a presentation on Monday, fiscal officials also highlighted the improving debt-to-gdp ratio of the government.

The government’s debt as a proportion of GDP fell to its lowest level in 13 years to 50.9 percent last year from 52.4 percent in 2010.

The 2011 ratio is the lowest since 1998 when the ratio fell to 48.1 percent. The government’s debt- to GDP ratio is a measure of the state’s capacity to settle its obligations. The 2011 ratio surpassed government’s revised target of 51.7 percent for 2011.

Last year, S& P raised upgraded its outlook for the Philippines to positive from stable.

Finance Secretary Cesar Purisima met with rating agency officials in London in February. He has repeatedly said that the country deserves a better credit rating.

“The market has already recognized the Philippines’ resilience and the strength of our credit standing and is rating us as investment grade,” he said after the February meeting, noting that the Philippines’ issuance of $1.5 billion in global bonds in January marked the lowest US dollar coupon ever achieved by an Asian sovereign bonds.

The Finance chief said ratings agencies are very keen on our push for reforms in the sin taxes.

A World Bank study estimates that we could gain as much as 1.3 percent of gross domestic product (GDP) in additional revenues from reforms in the sin taxes like uniform tax rates and indexation.