Philippines less likely to be affected by crisis

According to a recent statement by Fitch Ratings, the Philippines will be less vulnerable to the current storm that the entire globe is experiencing. They argue that this is primarily due to the country's more stable banking practices coupled by the conservative investment exposure compared to the rest of the southeast region.

The announcement by James McCormack, managing director of the Asia-Pacific sovereign ratings at Fitch speaking before Reuters said that he saw no reason to change the country's BB rating and that the economy has a more stable outlook for 2009. He added that the country's healthy fundamental indicators should sustain this outlook from being downgraded, but also noted that there will definitely be a minimal growth expected in government revenues.

On Wednesday, the Philippines, one of Asia's largest sovereign debt issuers, launched a 10-year dollar bond offer, which one banker said could be for as much as $1.5 billion.

The fund raising is to help finance a budget deficit of 102 billion pesos ($2.2 billion) this year from an estimated 75 billion pesos in 2008.

The government relies heavily on foreign and local borrowings to finance its capital and social spending programme because revenues growth has not kept pace with the state's funding needs.

Government has instituted higher sales rate tax in 2005 to coral the ballooning budget deficit primarily due from the widespread tax evasion, smuggling, and corruption. The government even resorted to selling off state assets to offset the weak revenues that time.

Gloria Arroyo's government says that they are expecting similar problems this coming year as the effects of the global crisis pushes the country's growth to aroung 3.7 - 4.7 percent. This assesment was countered by McCormack citing that government's forecast is "too optimistic" and states that the slower growth of about 2.5 percent in the country's economy. He added "It is quite weaker than the government's estimate, but then again when we compare that to the other countries in the region, that is not a bad growth rate..."