The good 2005 fiscal performance and 2006 fiscal outlook, together with the more settled political environment, warrant the change in outlook. |
The lower annual fiscal projection won't alter the negative outlook. Our main focus is the full implementation of the expanded value-added tax and the two percentage point increase in its rate next year. |
The more of these events there are, inevitably the weaker she becomes. Surviving a crisis in leadership doesn't necessarily strengthen a leader. |
The Philippines is one country where politics matter. |
The reserves are more than adequate. Maybe it is becoming excessive. |
There are clear improvements in the banking sector, for example, where the legacy of directed lending is slowly giving way to a more market-based allocation of credit supported by the involvement of foreign strategic investors. |
There are two things that we're still concerned about. One is the structure of public finances notwithstanding the fiscal performance in 2005 and two is the political outlook and the effect that politics might have on public finance. |
There is a question about how long you can do that, but it is not as if money supply is growing too fast. |
These are positive numbers for the Philippines. We have to make sure that the value-added tax increase is implemented and fiscal follow up is done in the medium term to further improve revenue. |
They do a pretty good job of getting people in who are quite capable. They have a deep bench. |
This is one of the countries where politics matter and it is central to our assessment. Politics affects economic policy. |
This will allow the government debt/GDP ratio to continue its downward trajectory, alleviating pressure on sovereign credit worthiness as debt ratios gradually compare more favorably with rating peer group medians. |
Those sovereigns in the midst of political turmoil also have the weakest growth rates in emerging Asia, and further downward revisions to the growth forecast may be necessary. |
We are a bit cautious about the two-percentage-point increase because of the risks - primarily political risks - that it might not be implemented. One thing we learned from this is that there is always a potential for delays in its implementation. |
We are starting to see maybe a turning in the housing market in the US. And if the US consumer retracts a little, we would expect to slow down in the US in the second half of the year. That translates into a slowdown in Asia as well. |