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Thursday, September 18, 2008
Arroyo: RP to ride out financial storm
MANILA -- President Gloria Macapagal-Arroyo expressed confidence Wednesday the Philippines will ride out the global financial market turmoil with its strong domestic economy bolstered by reforms.
In the economic forum organized by the government, President Arroyo admitted the US subprime mortgage crisis has not spared the Philippines. However, she said the government's fiscal reforms allowed the country to survive the fallout from economic crisis.
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She made mention of several other countries also affected by the turmoil in the US market, including Singapore, Hong Kong and South Korea.
She said: "The heights to which oil and other commodity prices have risen were unexpected and the depth of the financial market turbulence in the US is still unknown." She added that "against this backdrop, the best buffer we have to external vulnerability is our own domestic internal strength."
The President said a three-year-old tax reform has shored up funds for relief programs for the poor hurt by oil and food price spikes.
Even as oil and food prices ease up, she said the government will remain focused on reigning in inflation, lowering prices of basic commodities, raising investments to the poor, and continuing reforms to boost domestic consumption and less reliance on external markets.
She added that programs and projects have been put in place, which helped cushion the impact of the rising prices of fuel and food especially on the poor.
These include the microfinance and livelihood assistance for relatives and families of those from the transportation sector, the loan programs for the public transport sector, and the upgrading of government hospitals.
Other measures stressed by Arroyo are the removal of tariffs on petroleum products and the provision of subsidy programs like the "Pantawid Kuryente," "Pantawid Pag-aaral," and "Programa Para kay Lolo at Lola".
Arroyo said these reforms have helped the Philippines "in times of economic upheavals."
Addressing the same forum, central bank Governor Amando Tetangco said the US mortgage crisis has not significantly affected the Philippine banking system and domestic banks' exposure to bankrupt US investment house Lehman Brothers and other ailing investment banks has been limited.
However, Tetangco said moves by investors to avoid risks by staying away from emerging markets like the Philippines could adversely affect the growth of the local banking sector.
He added that the country, like many emerging economies, faces the risk of high inflation and slower growth as a result of export cuts due to the slowdown in US and global economic growth. Such risks include higher borrowing costs and reverse capital flows.
Inflation averaged at 8.8 percent for the first eight months of the year, rising 12.5 percent in August from a year ago. It is expected to taper off to single-digit by the first quarter next year, but is forecast to exceed targets in 2008 and 2009, Tetangco said.
Socioeconomic Planning Secretary Ralph Recto meantime said that with easing price pressures and continued strong buffer, the country's economy could achieve at least 4.7 growth for 2008.
Growth may reach 5.5 percent if public spending is stepped up, Recto added.
The left-wing coalition Bayan, in a statement, also said the country remains vulnerable to global economic upheavals and is at risk from the pullout of speculative investments and export cuts despite Arroyo's general claims of strong economic fundamentals. (JMR/With AP/Sunnex)
For more Philippine news, visit Sun.Star Iloilo. (September 18, 2008 issue)
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