UPDATES on Philippine economic developments have been presented to debt watchers as the government pursues its bid to secure the country an investment grade credit rating.

The Finance department said that its chief, Sec. Cesar V. Purisima, met with representatives of Fitch Ratings and Moody’s Investors Service in London yesterday to reiterate the case for an upgrade.

"I met with them to continue our dialogue on the strength and resiliency of the Philippine economy, as well as to discuss our view that the Philippines continues to be underrated," Mr. Purisima was quoted as saying in a statement.

"The market has already recognized the Philippines’ resilience and the strength of our credit standing and is rating us as investment grade," he added.

The Finance chief noted that the country secured interest rates of only 5% for its $1.5-billion 25-year global bond offering last month.

"In fact, our bond issuance in January marked the lowest USD coupon ever achieved by an Asian sovereign for a bond with a tenor greater than ten years," he said.

Mr. Purisima is in Europe for a week-long roadshow focused on the government’s public-private partnership (PPP) program.

During the meeting, he said, Fitch and Moody’s officials recognized the country’s improving debt and revenue ratios. They likewise encouraged the Aquino administration to pursue tax reforms, particularly in the excise taxes imposed on "sin" products like alcohol and tobacco.

"The ratings agencies are very keen on our push for reforms in the ‘sin’ taxes. A World Bank study estimates that we could gain as much as 1.3% of GDP (gross domestic product) in additional revenues from reforms in the sin taxes like uniform tax rates and indexation," Mr. Purisima said.

"Such an improvement in our tax base would definitely boost our drive towards investment grade."

The country bagged credit rating upgrades from Fitch and Moody’s last year. Moody’s currently rates the Philippines at Ba2, two notches below investment grade. Fitch granted the country a BB+ rating, one level shy of investment grade -- a level that was reached last month by neighboring Indonesia.

As this developed, Philip Morris Fortune Tobacco Corp. (PMFTC) -- which will be affected by the "sin" tax reforms that Mr. Purisima said was tied to an upgrade -- yesterday accused the government of obsessing over its credit ratings.

"The government is focusing too much on credit ratings. I would like to see a lot more focus on growth and also on infrastructure," PMFTC President Chris Nelson said in a media briefing where he criticized plans to increase excise taxes on tobacco and alcohol products.

The economy grew by just 3.7% last year, well below the official 4.5-5.5% forecast, as the government failed to roll out its PPP projects and exports fell due to a global downturn. The drop in public spending, though, kept the fiscal deficit at bay, one of the key factors for the positive credit rating actions bestowed in 2011. -- Diane Claire J. Jiao

Source: BusinessWorld