Philippine election key to credit rating

An employee of the Philippine Commission on Election guards ballot boxes to be distributed to voting precincts

In this story: Arroyo needs majority to stick to program 'Unusual way' to install a government RELATED STORIES, SITES

HONOLULU, Hawaii -- Monday's Philippine election is key to the country's credit rating outlook, ratings agency Standard and Poor's said here.

Philippine votersl go to the polls on Monday to elect 13 senators and to fill 262 seats in the House of Representatives.

The poll is widely seen as a referendum on the government of President Gloria Macapagal Arroyo.

"If the president doesn't get a strong mandate, governability will be an issue for her for the rest of her term," said John Chambers, managing director for Standard & Poor's.

He spoke to reporters on the sidelines of the Asian Development Bank meeting in Honolulu.

Arroyo needs majority to stick to program

If Arroyo fails to get a majority of congress, she will have a hard time pursuing her programs. It would also imply that the public does not support her government.

S&P currently rates the Philippines foreign-currency debt at BB+, but has had that rating on negative review since October last year.

Although the administration of desposed fromer President Joseph Estrada administration had shown only "a flaccid commitment to structural reform," the "people power two" movement that ousted him from office raised concerns about political stability in the Philippines, Chambers said.

'Unusual way' to install a government

"It restored a more competent economic team to the government but it was an unusual way to install a government," he said.

S&P also wants to see the Philippine government take further legislative steps to reform the power sector and the nation's central bank, Chambers said.

Trading in the Philippine stock market has been mostly on hold this week, with investors sidelined ahead of the election.

The main PSE index closed Thursday up 0.14 percent at 1,443.85.

Reuters contributed to this report.

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