Thu, Oct 11, 2007 - Page 12 News List

Taiwan's economic rating unchanged in S&P's latest update

By Kevin Chen  /  STAFF REPORTER

Standard & Poor's Ratings Services yesterday retained a negative outlook on Taiwan's overall economic rating, citing the nation's fiscal deficit and an uneasy relationship across the Taiwan Strait.

In its latest update of ratings for Asia-Pacific economies, the international ratings agency maintained the "AA-" long-term and "A-1+" short-term credit ratings it has had for Taiwan since late 2004.

"Of the rated 22 sovereigns, 15 are currently on stable outlooks, five are on positive outlooks, and only two sovereigns, Taiwan and Fiji, are on negative outlooks," S&P said in an e-mail statement yesterday.

In its semiannual "Asia-Pacific Sovereign Report Card" released earlier yesterday, S&P said Taiwan had improved its fiscal situation and seen increased income in the short term, but added that the nation was still experiencing long-term problems with fiscal deficits and government debt.

In response to S&P's remark, Council for Economic Planning and Development Chairwoman Ho Mei-yueh (何美玥) said she was "not nervous" about the rating, CNA reported yesterday.

The nation's ratings would improve gradually as a result of the government's fiscal efforts in recent years, Ho said.

CNA, citing Ho, said the government posted a budget surplus of NT$16.6 billion (US$509.4 million) for last year, while the government's general budget was expected to see a deficit of less than NT$100 billion next year for the first time in nine years.

Many Asia-Pacific countries have demonstrated better fiscal performance and improved banking quality over the past few years, S&P said.

"In the medium term, greater efforts in structural and fiscal reforms, further deepening of domestic capital and debt markets, increased investment in infrastructure, and improvements in public sector transparency and predictability could see positive ratings actions on many Asia-Pacific sovereigns," S&P credit analyst Elena Okorotchenko said in the statement.

"Conversely, a stalling or reversal in the reform process or significant policy missteps could slow down the positive credit momentum and even put downward pressure on the ratings on emerging Asia-Pacific sovereigns," she said.

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