Political problems batter RP economy<\/p>\n
Agence France-Presse, Manila<\/p>\n
Political problems such as a military mutiny and clashes between
\nthe administration and the opposition are the main problems
\nweighing down what should be a vibrant Philippine economy,
\nofficials said on Monday.<\/p>\n
Politics is the main reason the Philippine peso has fallen to
\n31-month lows while foreign direct investment has slumped despite
\nthe government's success in controlling the budget deficit and
\nspurring domestic demand.<\/p>\n
The economic officials told a mid-year briefing to businessmen
\nthat the country had done well in weathering international crisis
\nsuch as the Severe Acute Respiratory Syndrome (SARS) outbreak and
\nthe Iraq war.<\/p>\n
\"It is a good situation from an economic point of view. But
\nour political situation today is not as good,\" Central Bank of
\nthe Philippines governor Rafael Buenaventura said.<\/p>\n
Finance Secretary Jose Isidro Camacho said the economy was
\ngrowing better than expected but remarked that \"constant
\npoliticking (is) enough to depress and demoralize all of us.\"<\/p>\n
The officials cited the failed military mutiny by some 300
\nrenegade soldiers on July 27 and continued reports that another
\ndestabilization attempt was being planned.<\/p>\n
They also cited a court ruling last month, suspending
\nBuenaventura as well as opposition accusations against the family
\nof President Gloria Arroyo.<\/p>\n
These political controversies had caused the Philippine peso
\nto fall to 31-month lows of 55.60 to the dollar last week
\nalthough it recovered to 54.96 to the dollar in late trading on
\nMonday.<\/p>\n
\"The peso's weakness is brought about by too much politics. If
\nwe can surmount this, the peso should go back to normal levels,\"
\nBuenaventura said, adding he considered the local currency to be
\ncompetitive to the Thai baht.<\/p>\n
He expressed confidence the local unit would recover by the
\nfourth quarter of the year when the millions of Filipinos
\noverseas traditionally remit huge amounts into the country.<\/p>\n
However he warned this improvement of the peso could still be
\nderailed if political problems worsen.<\/p>\n
Despite the politics, the Philippines still posted 3.2 percent
\ngross domestic product (GDP) growth in the second quarter of the
\nyear, the officials remarked.<\/p>\n
Buenaventura said inflation should still be within the 4.5
\npercent to 5.5 percent target set for 2003 while Budget Secretary
\nEmilia Boncodin said the budget deficit -- once a major
\ngovernment concern -- was likely to be within the 202-billion-
\npeso ($3.67 billion) ceiling set by Manila.<\/p>\n
Thanks to the huge savings in the first half of the year, \"now
\nwe have a lot of room to spend in the second semester\" to further
\nboost growth, Boncodin said.<\/p>\n
Economic Planning Secretary Romulo Neri reiterated that GDP
\ngrowth for the full year would still hit the 4.2 percent target
\nset by government.<\/p>\n
The officials cited figures showing that exports and the
\nagriculture sector were set to rebound while business and
\nconsumer confidence remained strong in the second half of the
\nyear.<\/p>",
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