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