Moody's ups Philippines view to stable

Moody's Investors Service said it changed to stable from negative the outlook on the Philippines' key ratings due to the progress made in reining in fiscal deficits in 2006 and an easing in dependence on external financing.

The affected ratings include the B1 long-term government foreign- and local-currency ratings, the B1 foreign-currency bank deposit ceiling and Ba3 foreign-currency country ceiling.

Based on fiscal performance through the first three quarters of 2006, it seems likely that the government will readily meet its deficit reduction target for the year as a whole, Moody's said. Although the full-year result for expanded value-added tax receipts is not available, total revenue collection from tax and non-tax sources seems likely to reach the annual target.

Smaller deficits and the country's improved external payments position have allowed the government to begin modest external debt prepayment. However, the agency said, the Philippines remains highly indebted compared with its rating peers.

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