S&P on Friday lifted the Philippines’ sovereign foreign currency debt rating from BB- to BB. The move reflects the strong balance of payments, the implementation of new reforms which will lift trend GDP growth, and the improvements on the fiscal side which are now coming through. Nevertheless, the government debt to GDP ratio will probably stay relatively high for Asia while lifting the tax take remains an enormous challenge. What’s more, government borrowing costs are still set to rise in 2011 as central bank interest rates move up.