[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 13 July, 2005, 06:51 GMT 07:51 UK
Philippines' credit woes escalate
President Gloria Arroyo
Embattled President Gloria Arroyo is facing demands to step down
The Philippines face rising borrowing costs after a third leading ratings agency cut its sovereign debt outlook.

The downgrade by Moody's, which follows warnings by Standard & Poor's and Fitch, came amidst a political storm surrounding President Gloria Arroyo.

Ms Arroyo is embroiled in a row over accusations of electoral fraud.

She has apologised for calling an election commissioner while votes were being counted during May's elections, but denies fraud and refuses to quit.

Court decision

Calls for Ms Arroyo's resignation have come from, amongst others, her former economic team.

The team, which includes finance secretary Cesar Purisima, quit last Friday.

A further nine cabinet members also resigned.

On Wednesday, Moody's said it had downgraded its outlook on its B1 long-term foreign-and local-currency ratings for the Philippines from stable to negative.

"Should there be a prolonged weakening of government effectiveness, or a change in government, future fiscal and external debt policies could be very different from that taken by the Arroyo government so far," Moody's said.

The ratings agency also pointed to a decision at the beginning of the month by the Philippines supreme court to suspend the introduction of a new value-added tax law, designed to reduce the country's massive budget deficit.

On Monday, Fitch and S&P said their outlook downgrades were influenced by the tax suspension, as well as by the uncertain political climate.


SEE ALSO:
Philippines hit by ratings blow
11 Jul 05 |  Business
Embattled Arroyo refuses to quit
10 Jul 05 |  Asia-Pacific
Bishops pile pressure on Arroyo
10 Jul 05 |  Asia-Pacific
Court suspends Philippines tax
01 Jul 05 |  Asia-Pacific
Arroyo problems see minister quit
30 Jun 05 |  Asia-Pacific


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
UK | Business | Entertainment | Science/Nature | Technology | Health
Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
Americas Africa Europe Middle East South Asia Asia Pacific