MANILA (AFP) - Ratings agency Standard and Poor's affirmed its credit ratings for the Philippines, saying the outlook for both long-term ratings was stable despite the global financial turmoil.

The agency said it had affirmed its 'BB-' long-term and 'B' short-term foreign-currency sovereign credit rating on the Philippines. It also affirmed the 'BB+' long-term and 'B' short-term local-currency sovereign credit ratings.

These ratings reflect "the external strength and relatively low vulnerability of the banking sector against the Philippines' long-standing fiscal weaknesses," the agency said in a statement.

S and P said that the Philippines was less exposed to "liquidity risks" and possible bank collapses than other countries in the same ratings category.

It also cited the continued growth in remittances from the 10 million Filipinos working overseas in the first quarter of the year as well as "growing surpluses in service exports and prudent exchange-rate management (which) ensure a safe level of external reserves."

The ratings agency noted that there are "ongoing risks" of inadequate government revenues and the slow progress in boosting these collections in the face of the current economic turmoil.

It also warned that national elections scheduled for May 2010 "may create moderate volatility, and pose a distraction to policy making and implementation", causing delays in passing much-needed revenue measures.

The Philippines' ratings outlook could be upgraded to "positive" if there was a "renewed focus and commitment to fiscal consolidation and revenue improvement," by the administration that takes office in July.

But the outlook could also change to "negative" if it becomes clear that the government is not addressing the deterioration in revenue collections and the growing budget deficit, the ratings agency warned.

Philippine economic officials had earlier rejected forecasts by international lending agencies that the country could fall into a recession soon.

However the officials say economic growth this year is likely to be a modest 0.8 percent.