Philippines must take steps to avoid Mexican crisis<\/p>\n
MANILA (AFP): The Philippines must act on its fiscal position
\nand trade deficit if it hopes to avoid a Mexico-style currency
\ncrisis and enjoy East Asian growth rates, economists said
\nyesterday.<\/p>\n
Emilio Antonio, director of the Institute of Economic Policy
\nResearch, warned at a forum called by Philippine exporters that
\n\"a change in perceptions of foreign investors could precipitate a
\nMexican crisis.\"<\/p>\n
Antonio, whose agency is part of conservative private think-
\ntank the Center for Research and Communications (CRC) said the
\ncountry's present economic rebound was anchored on political and
\neconomic stability that had restored the confidence of foreign
\ninvestors.<\/p>\n
But he said this recovery was strongly dependent on foreign
\nfunds and on \"volatile investments\" to bridge foreign exchange
\nshortfalls caused by the trade deficit and that these funds and
\ninvestments could easily be withdrawn.<\/p>\n
\"We are not yet Mexico but we are going in the Mexican
\ndirection and away from the Asian direction\" of growth based on
\nhigh domestic savings and trade surpluses, he said.<\/p>\n
Victor Abola, executive director of the Hong Kong-based
\nPhilippine Research Center, meanwhile warned that the country was
\nfailing to emulate the other fast-growing economies of Asia
\nbecause of its slow export growth and difficulty in raising
\nrevenues.<\/p>\n
Abola and other economists at the conference also said the
\ncountry's foreign exchange rate was uncompetitive and resulted in
\nboth lower revenues and higher trade deficits.<\/p>\n
They belittled the 18.11-billion-peso (US$754.6 million)
\nbudget surplus posted in 1994, saying this was brought about by
\nprivatization of state assets, which was due to run out this
\nyear.<\/p>\n
Abola also said the high trade deficits and strong Philippine
\ncurrency showed economic growth was import-dependent and was not
\nfiltering down to the masses.<\/p>\n
Finance Undersecretary Romeo Bernardo admitted at the forum
\nthere was a need for tax reform to increase revenues, but added
\nthat \"privatization, at least, will buy us time.\"<\/p>\n
He said government was trying to increase savings and actual
\ninvestment rather than portfolio investments, noting that
\n\"capital flight is not a far-fetched scenario.\"<\/p>\n
But he insisted the Philippines was different from Mexico
\nsince it had a free-floating exchange rate.<\/p>\n
\"There is still time to adjust. We are not anywhere near a
\nMexican-type crisis,\" Antonio added.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/philippines-must-take-steps-to-avoid-mexican-crisis-1447893297",
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