MANILA - Global debt watcher Moody's Investors Service has raised its sovereign rating for the Philippines to Ba3 from B1, praising the country's resilient financial system and external payments position amid difficult global conditions.

The agency said the rating had been changed after the country's foreign exchange reserves struck a historical high and after no special measures had been required to protect the banking system from external shocks.

The rating, which is now 3 notches below investment grade, has a stable outlook.

Finance Secretary Margarito Teves welcomed the upgrade, saying that it affirms the government's sound response to the global financial crisis and recognizes the Philippine economy's resilience.

"The credit rating action becomes more significant as this was done after more than four years with RP rated at B1 since February 2005 and at a time when the world economy is experiencing probably its worst crisis in global history," he said.

"This positive development should inspire us to work harder to further improve our credit outlook by returning to the path of fiscal consolidation through sustained revenues from administrative measures and legislation of revenue enhancement measures," he added.

The government was targeting to balance the budget as early as 2008, but has had difficulties due to dwindling revenues and accelerated spending amidst the economic crisis.

The Philippines has revised upward its budget deficit ceiling this year to P250 billion or 3.2% of gross domestic product (GDP) from P199.2 billion or 2.5% of GDP. With a report from Reuters