Finance chief warns against deferring VAT law.

(From Philippine Daily Inquirer)

Byline: Daxim L. Lucas

THE ENACTMENT OF AN UNADULTERATED version of the Reformed Value-Added Tax Law is crucial to prevent a further erosion of the countrys credit ratings.

This was stressed by international credit-rating firms during their meetings with the countrys economic managers in the United States last week, Finance Secretary Margarito B. Teves said.

The credit ratings firms-along with foreign investors, creditor banks and multilateral financing institutionswere reacting to moves by some lawmakers to postpone the implementation of the controversial tax measure, as well as President Macapagal-Arroyos statement that she was open to its delay.

They told me that this would be very unfortunate, Teves said in a telephone interview.

The countrys credit rating indicates its ability to repay foreign loans, and determines how much interest it will pay on these borrowings. Influential firms like Standard & Poors and Moodys Investor Service rate the countrys credit at BB and Ba2, respectively, both of which are two notches below the official cutoff for junk-rated bonds.