Fitch cuts RP credit rating outlook

Fitch cuts RP credit rating outlook

MANILA: Fitch Ratings cut on Monday its credit rating outlook on the Philippines to negative from stable, citing heightened political uncertainty and a court decision to freeze the implementation of a crucial tax measure.

"A rating downgrade could be triggered by protracted delays in the Supreme Court decision, an eventual decision that the expanded value-added tax legislation is unconstitutional, or continued political disorder," the international ratings agency said in a statement.

It affirmed the Philippines' long-term foreign and local currency ratings at "BB" and "BB+", respectively. The short-term foreign currency rating remained at "B" and the country ceiling at "BB".

On July 1 the Supreme Court stopped the implementation of a new value-added tax law, the core of the Arroyo government's fiscal reform agenda aimed at reducing the state's massive budget deficit.

The law keeps value added tax at 10 percent but expands its coverage to include other previously exempt sectors such as fuel and electricity.

President Gloria Arroyo is facing mounting calls to resign and an impeachment complaint has been filed against her in Congress amid allegations she cheated her way to victory in last year's election. -- AFP