The U.S. Federal Aviation Administration has downgraded Philippine airline operations and put them under heightened scrutiny because of their inadequate safety standards, the U.S. Embassy said Tuesday.

The decision gives the Philippines a Category 2 rating along with countries such as Bangladesh, Ivory Coast, Ghana and Indonesia. It means Philippine carriers can continue flying to the U.S. but only "under heightened FAA surveillance," the embassy said in a statement.

The embassy also advised Americans flying to and from the Philippines to use carriers from countries whose civil aviation authorities meet international standards.

Only one of the country's carriers, Philippine Airlines, currently flies to the U.S. FAA rules stipulate that airlines from the Philippines cannot expand services to the United States under a Category 2 rating.

The FAA informed the Philippine government it has "serious concerns" about the oversight of Philippine air operations, which it said did not comply with International Civil Aviation Organization safety standards.

A spokesman for the Philippine Transport Department, Thompson Lantion, did not dispute the downgrade and said his department would conduct an in-house investigation to determine the shortcomings and fix them.

He said it the Philippine Congress must pass proposed legislation to create a Civil Aviation Authority to help modernize the country's system, and must secure more funds for safety and aircraft maintenance.

Both houses of the Philippine Congress have already approved the bill, but it still needs to be ratified in a joint session and signed by the president.

The head of the Air Transportation Office, Daniel Dimagiba, told the Business Mirror newspaper that his annual budget of $32 million was spent mostly on salaries and operating expenses. He said the office would need at least another $24 million to upgrade navigational equipment and communications _ money that would become available when the CAA is set up.

On its Web site, the FAA says the Category 2 rating means the country lacks laws or regulations needed for the certification and oversight of airlines under minimum international standards.

Philippine Airlines President Jaime Bautista said the downgrade dampened hopes of increasing its 33 flights a week to the U.S. Also affected will be the delivery of six new Boeing 777-300ER airplanes ordered by the airline, he said.