The new Philippine government will have to pass new tax laws to secure a long-sought-after credit ratings upgrade for the country, one of Asia's most aggressive sovereign borrowers in the international capital market, Finance Secretary Margarito Teves said.

In the meantime, Teves told Dow Jones Newswires in an interview late Thursday, the Philippines could work toward convincing the major credit rating agencies to revise their outlook on its sovereign debt to positive from stable, especially since the country emerged from the global financial crisis relatively unscathed.

"We had a very difficult year last year. The fiscal situation is pleasantly different this year: revenue collection is better although we're lagging on asset sale," said Teves.

The Bureau of Internal Revenue's collection in the first two months of the year was 13% higher than a year earlier, while the Bureau of Customs generated 26% more compared with a year earlier. The two agencies accounted for close to 90% of government revenue in that period.

The government projects privatization proceeds to reach P30 billion this year, but it has yet to sell any of the assets it has identified for sale.

A credit rating upgrade would lead to lower borrowing costs for the Philippines, which had to rely heavily on issuing fresh debt to finance a yawning budget deficit that last year hit a record P298.5 billion ($6.54 billion) due to a weaker economy and a slew of laws that granted tax breaks in the face of the global financial crisis.

For this year, the Philippines is expected to continue running a wide budget deficit of P293.2 billion.

The gap between government revenue and spending in the first two months of the year hit P70.3 billion despite the improved collection by the bureaus of internal revenue and of customs.

Teves, who will likely leave the finance portfolio after President Gloria Macapagal Arroyo ends her term on June 30, said the next administration must leverage its political goodwill to "formulate challenging reforms" to restore the gains from the passage of the expanded value-added tax in 2005 that were recently eroded by tax reprieves approved by Congress. (Dow Jones)