Manila 'came close to debt moratorium'<\/p>\n
MANILA (Dow Jones): Philippine Central Bank Governor Rafael
\nBuenaventura said on Wednesday the country came close to
\ndeclaring a debt moratorium after foreign banks cut credit lines
\nlast December while the leadership crisis was raging.<\/p>\n
Buenaventura, speaking to the Foreign Correspondents'
\nAssociation, said disaster was only averted by the ouster of
\nformer president Joseph Estrada on Jan. 20.<\/p>\n
\"Our access to credit had already been cut off in December
\ninternationally by banks who were no longer willing to increase
\ntheir exposure in the Philippines because of fears that we would
\nhave a violent transition,\" Buenaventura said.<\/p>\n
The corruption allegations made by a provincial governor
\nagainst Estrada last October plunged the Philippines into its
\nworst financial crisis in decades and had a devastating impact on
\nManila's financial markets.<\/p>\n
\"What do you do when your access to credit disappears? We had
\nmaturing obligations in December,\" said Buenaventura.<\/p>\n
Buenaventura said the bank was fortunate to have a buffer of
\nforeign reserves to meet - at least, for a time - its debt
\npayments unlike the situation during the debt crisis of 1983.<\/p>\n
\"In 1983 we had no reserves, we lasted one week and declared a
\n(debt payment) moratorium,\" said Buenaventura. \"Eventually, that
\ncould have happened to us too.\"<\/p>\n
At the height of leadership crisis, the dollar surged to a
\nrecord 55.75 pesos on Jan. 17 - three days before Estrada was
\nstripped of his powers after mass street protests backed by
\nsenior officials in the military and the police.<\/p>\n
\"If things hadn't worked out and the peso had a freefall to 90
\npesos (to the dollar) they'd probably be burning my effigy,\" said
\nBuenaventura, adding that the bank resisted calls to massively
\nraise interest rates to stabilize the peso as this could have
\nbadly damaged the economy.<\/p>",
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