 President Gloria Arroyo faces allegations of electoral fraud |
Political uncertainty in the Philippines has led two ratings agencies to cut their outlook on the country to "negative" from "stable". Standard & Poor's said it doubted the country's ability to reduce its debt due to the "ongoing political crisis".
Fitch Ratings warned several factors could trigger a full downgrade. Philippine President Gloria Arroyo faces allegations of electoral fraud.
On Friday, ten cabinet members - including her economic team - resigned.
Budget deficit
An impeachment complaint has also been filed against Ms Arroyo and there have been calls for her to resign.
 |  Failing a timely resolution of the leadership crisis, risk perceptions toward the country are set to increase |
Mrs Arroyo has apologised for phoning an election commissioner while votes were being counted, but denies fraud and refuses to step down.
On 1 July, the Philippines supreme court suspended the introduction of a new value-added tax law designed to reduce the country's massive budget deficit.
The Fitch and S&P outlook downgrades were influenced by the tax suspension, as well as by the uncertain political climate.
However, the two agencies retained their existing foreign and local currency ratings for the country.
This could change. S&P said that "failing a timely resolution of the leadership crisis, risk perceptions toward the country are set to increase, ultimately putting pressure on the ratings at their current level".
Fitch warned that a full ratings downgrade "could be triggered by protracted delays in the supreme court decision, an eventual decision that the expanded value-added tax legislation is unconstitutional, or continued political disorder".
One-Minute World News 
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