Pimentel: How reliable are credit rating agencies?

Senate Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) said the people should not be lulled into believing that the national economy is in a fine shape just because it received positive marks from international credit agencies.

Pimentel made this comment following reports that the London-based Fitch Ratings has maintained its stable outlook for the Philippines, saying its economy is "reasonably healthy" despite the crisis in global finance.

He noted that the credibility of international credit rating agencies is now under question because they gave impressive ratings to many of the major banks, investments houses and other financial enterprises that have gone sour and collapsed.

Lehman Brothers and Merril Lynch were among the financial companies which went bankrupt even after being positively graded by these credit agencies.

"Self-appointed credit raters Fitch, Moody's and Standard and Poor's were all hornblowers of big banks and investment houses which have collapsed in the economic meltdown. They should jump into Lake Lanao," Pimentel said.

Fitch managing director James McCormack said the country's public finance is well-managed in the last couple of years.

Pimentel said this comment smacks of an unfounded flattery considering that the Arroyo administration was forced to abandon its zero budget deficit goal in 2008 due to the failure of revenue agencies to meet collection targets

He said the amount of public debt hardly decreased even if the government was religiously repaying its loans because it kept on contracting new borrowings.