Is the Philippine economy on the brink of a crisis or the verge of a boom? It depends on whom you ask. Rating agencies, transfixed by stubborn budget deficits and ballooning public debt, are gloomy. One, Moody's, demoted the government's bonds by two notches in February; another, Standard & Poor's, downgraded them by one notch in January. Some commentators think that the Philippines, with a consolidated public-sector debt of almost 140% of GDP, is heading for Argentine-style meltdown and default. Investors, on the other hand, are sanguine: the stockmarket is near a five-year peak and the peso at its highest against the dollar since July 2003. Applications for investment incentives more than doubled in 2004 and are up again so far this year.
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