Moody's may cut Philippine rating

Moody's may cut Philippine rating

MANILA: The Philippines' credit rating may be cut by Moody's Investors Service on concern President Gloria Arroyo will fail to get lawmakers to pass tax increases needed to narrow the nation's budget deficit.

The ratings are on review for possible downgrade "due to concerns over the sustainability of the government's fiscal and debt positions," the company said in a statement released in Hong Kong. Moody's foreign- and local-currency ratings for the Philippines are Ba2, two levels below investment grade and on a par with Fiji and Bulgaria.

Arroyo is seeking to end a run of deficits since 1998 that bloated national debt to 3.54 trillion pesos (US$63 billion) in June, 19 percent higher than a year earlier. Credit rating cuts have made it more expensive for the government to borrow and caused the peso to slump, making it harder to meet debt payments. -- Bloomberg