Moodys upgrade rating of the Philippines 1 notch up -economy resilient

MOODY'S INVESTORS SERVICE has raised the Philippines' credit rating outlook to positive from stable as the government continues to reduce the fiscal deficit and public debt.

The move sets the stage for a possible upgrade of the Philippines' Ba2 credit rating -- two notches below investment grade -- in the next 12 to 18 months, Moody's Assistant Vice-President Christian de Guzman yesterday said in an e-mail.

The debt watcher is slated to visit the country in June as part of its "regularly scheduled surveillance activities," he added.

Finance Secretary Cesar V. Purisima, in a statement, said: "This is one more step in our march towards investment grade, towards reducing the gap between the market rating and the credit rating, and more importantly towards a more sustainable growth path".

The Aquino administration aims to secure its first-ever investment grade credit rating by 2016 in order to lower its borrowing costs and attract more foreign investors.

According to Moody's, among the key drivers behind the positive outlook were the government's "faster-than-expected" fiscal consolidation and active debt management.

"The government of the Philippines has continued to demonstrate prudence in its fiscal management, as characterized by low budget deficits relative to its rating peers and a steadily declining level of debt relative to GDP (gross domestic product)," it said in a report released yesterday.

The government trimmed its deficit to ₱2.885 billion as of April, just 1% of its P279.1-billion cap for this year. It was also kept at P197.754 billion in 2011, two-thirds of the ₱300-billion ceiling.

Moreover, national government debt fell to only 50.9% of the GDP last year, surpassing the target of 51.7% and the 52.4% posted in 2010.

"Such outcomes are the result of expenditure restraint and improved revenue performance," Moody's noted.

Revenue collections, in particular, have grown faster than the GDP in the past five quarters, solely due to tax administration measures, it added.

"We expect revenue growth to improve further upon the passage of legislation aimed at restructuring excise taxes on alcohol and tobacco products."

Moreover, the Philippines has successfully improved its public debt by lowering borrowing costs, lengthening maturities and reducing foreign currency exposure, Moody's said.

The government successfully concluded a $1.5-billion offer of 25-year global bonds in January, securing interest rates of only 5% -- the lowest ever achieved by an Asian sovereign for bonds with a tenor greater than ten years.

It also repurchased $1.3 billion in high-coupon, foreign-currency bonds last October, cutting borrowing costs by settling the debt papers before their maturity.

Other than an improvement in national finances, Moody's also cited the Bangko Sentral ng Pilipinas (BSP) for its "solid track record of inflation management."

"The sovereign's vulnerability to global financial market shocks has been reduced by the build-up of foreign exchange reserves, resulting in turn from robust current account surpluses and healthy capital inflows in recent years," it added.

The outlook on the BSP's Ba2 credit rating was likewise raised to positive from stable yesterday.

While concerns still remain over the Philippines' large debt stock, it is mitigated by institutional features such as automatic appropriations in the budget for debt servicing, Moody's said.

"In addition, an increasingly large bond sinking fund provides an adequate buffer that guards against near-term liquidity pressures," the credit rater explained.

And as the global economic environment remains uncertain, the Philippine economy is stabilized by remittance inflows which support the balance of payments and spur domestic household consumption, Moody's said.

Overseas Filipino workers remitted a total of $4.842 billion in the first quarter, posting a 5.4% growth year on year against the central bank's 5% projection.

In order to secure a credit rating upgrade, Moody's urged the government to continue the reduction of public debt and pursue reforms to increase revenues. It must also accelerate public spending in areas of the economy that would spur growth.

"These developments should also be accompanied by the continued health of the country's balance of payments and stability of the financial system," it said.

The Philippines, meanwhile, must be wary of macroeconomic instability which could trigger inflation. "A shift away from the focus on good governance" would also be detrimental.

For their part, economic managers hailed the impact of the Aquino administration's campaign of good governance.

"The message we have been trying to send ... is that fiscal performance can improve with good governance," central bank Governor Amando M. Tetangco, Jr. said.

"This positive rating action is therefore welcome and is a sign that Moody's is seeing the fruits of good governance on all fronts: fiscal, monetary and external."

Mr. Purisima added: "The Aquino administration will continue to focus on good governance as the basis for good economics, on fiscal sustainability, on macroeconomic stability and on opening up the country to business and tourism."

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Philippines Chief Justice Renato C. Corona “Guilty of Graft and betrayal of public trust

MANILA — The chief justice of the Philippine Supreme Court, Renato C. Corona, was removed from office on Tuesday after it was disclosed during an impeachment trial that he failed to declare $2.4 million in foreign currency deposits.

Corona is guilty of corruption, paving the way for him to be sacked in the biggest win of President Benigno Aquino's anti-graft crusade.

With the conviction, Chief Justice Renato C. Corona is considered removed from office, but several senators voted for disbarment and other higher punishment.  

Twenty out of 23 senators found Corona guilty of Article II of the impeachment complaint which accused him of not declaring all his assets, including his peso and dollar deposits and real estate properties.

The chief justice was put on trial in January after majority of the House of Representatives decided to elevate their impeachment complaint against Corona to the Senate.

Corona is the first high-ranking official of the Philippines to be removed from office via impeachment, a method that is allowed by the Philippine constitution.

The impeachment trial of the chief justice is the second in the history of the Philippines. But, this is the first time that an impeachment trial was completed and a verdict was handed out.

Former Philippine President Joseph E. Estrada's trial in 2001 was aborted after prosecutors walked out of the impeachment court due to allegations that his allies tried to suppress evidence against him.

In a country where high-ranking public officials are often removed through street protests, and no one had ever been successfully impeached and convicted, the verdict was seen as a victory for the political maturity of the Philippines.

Chief Justice Corona was impeached by the House of Representatives and was convicted Tuesday (May 29, 2012) by the Senate acting as an impeachment court. He was accused of biased decisions and hiding assets.

"If your client cannot explain, I cannot abstain," said Senator Alan Peter Cayetano, upon voting to convict. "If you did not disclose, we have to depose. If you are not fit, you cannot sit as the C.J. of our Supreme Court."

Chief Justice Corona's impeachment — and the prosecution of former President Gloria Macapagal Arroyo, who appointed him chief justice — have been central to the anti-corruption campaign of President Benigno S. Aquino III. The president's supporters say that if Chief Justice Corona had not been removed, he could be an obstacle to good governance efforts that are linked to the country's recent strong economic performance.

Mr. Corona's supporters say that Mr. Aquino is trying to consolidate power by attacking the judiciary. The chief justice has also alleged that the president favors the impeachment in retaliation for court rulings that mandate the breakup of an Aquino family plantation.

In testimony on Friday, Chief Justice Corona insisted that under his interpretation of the law he was not required to disclose the money. During testimony that was marked by weeping, anecdotes about his family and breaks for medical checkups by nearby doctors, the chief justice debated the legalities of reporting requirements for government officials.

In the Philippines, senior officials are required to file a statement of assets, liabilities and net worth each year to verify that they are not enriching themselves from their government positions. One of the impeachment articles against the chief justice states that he under-declared his assets.

Anti-Corona group vows to keep eye on selection of next chief justice

While they briefly rejoiced over the conviction of their foe, a group who had pushed for the ouster of Chief Justice Renato Corona vowed Tuesday to keep a close eye on the selection of his successor.

Members of the Akbayan group made the vow after holding a rally outside the Senate grounds in Pasay City Tuesday afternoon, radio dzBB's Rodil Vega reported.

The report quoted the Akbayan group as saying the Aquino administration should follow through with its verdict and make sure Corona steps down from office.

It also suggested that the Aquino administration focus next on former President and now Pampanga Rep. Gloria Macapagal-Arroyo, who is under hospital arrest facing several graft cases as well as charges of electoral sabotage.

Members of Akbayan are allied with President Benigno Aquino III, including presidential political adviser Ronald Llamas, Commission on Human Rights head Loretta Ann Rosales, and defeated senatorial bet Theresia Baraquel a.k.a. Risa Hontiveros.

During Tuesday's Senate proceedings, Akbayan members rallied outside the Senate and cheered after Corona's fate was sealed.

The group left peacefully after the trial, the report said.

Public accountability, transparency, and the rule of law won in the Senate impeachment court's decision on Tuesday to find Chief Justice Renato Corona guilty of culpable violation of the Constitution and betrayal of public trust, House prosecutors said.

Accountability

Prosecution team spokesperson Rep. Erin Tañada and Rep. Sonny Angara said the Senate's decision that removes Corona from office marks a new start for the judiciary and will help the Aquino administration's campaign against graft and corruption.

"This is the start of putting our republic back in order for we did not convict a man but rather we saved our institutions from grievous harm of corruption and betrayal of public trust," Tañada said in a press statement.

"We showed our determination towards transparency and good governance with this verdict."

He said the Senate's decision proves that the country is now "politically mature."

Angara said Corona's removal from office is only the beginning in efforts to ensure good governance and restore faith in the judiciary.

Other congressmen who were among the 188 who signed the impeachment complaint against Corona also welcomed the Senate's ruling.

"It is finally over. History has been made with the first-ever impeachment process completed up to its final conclusion. Now, it is time to move on and move forward as a nation, and put this impeachment trial behind us, taking with us the lessons that should be learned from this event," House Assistant Majority Leader Karlo Alexei Nograles said.

Western Samar Rep. Mel Senen Sarmiento, in a press statement, described the Senate's decision as "a day that should be written in history as a victory for all Filipinos, a victory for equality among all citizens - no one is above the law."

"The impeachment process only demonstrated that our democracy is on solid grounds.  It is for all Filipinos, especially those who have less in life and those who are weak. The majesty of the law should always reign in all levels of society and no one could use the law at the expense of justice and the people's will," Sarmiento said.

"This day is a victory for the people.  A triumph of justice, this day will mark the true beginning of reforms in our justice system where each person is equal before the law," Iloilo City Rep. Jerry Trenas said.

"This is our watershed that should definitely strengthen our democratic system,"  Ang Kasangga partylist Rep. Teodorico Haresco said.

Sources: New Your Times, GMA, ABS-CBN, Bangkok Post

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