RP likely to enter new pact with IMF<\/p>\n
WASHINGTON (Dow Jones): The Philippines likely will enter a
\nnew agreement with the International Monetary Fund after an
\nexisting two-year precautionary borrowing agreement expires in
\nMarch, said Philippine Central Bank Governor Rafael Buenaventura
\nFriday.<\/p>\n
While the government hasn't made a final decision,
\nBuenaventura said the \"seal of approval\" from international
\nfinancial markets that comes from being under an IMF program is a
\nweighty consideration.<\/p>\n
An IMF team this week completed a quarterly mission to the
\nPhilippines to review economic developments set as conditions for
\nthe administration to tap the existing US$1.34 billion loan.<\/p>\n
In an interview with Dow Jones Newswires on the sidelines of
\nan IMF meeting, the central banker said the country will retain
\nthe \"rigid disciplines\" imposed by the multilateral agency no
\nmatter what the outcome.<\/p>\n
The Philippines has recovered swiftly from the depths of the
\nAsian economic slowdown of 1998, enabling the government and the
\nIMF in a draft agreement issued Wednesday to agree on more
\nambitious growth targets in 1999 and 2000.<\/p>\n
Gross domestic product is expected to grow 3 percent-3.5
\npercent in 1999 - up from an original target of 1 percent to 3
\npercent - swinging from a 0.5 percent contraction in 1998.<\/p>\n
Despite the recovering economy, the peso continues to fall in
\nsympathy with the Thai baht, touching a 10-month low of 40.89
\npeso late Friday from 40.60 peso late Thursday.<\/p>\n
The Philippines is enjoying a stronger economic recovery than
\nThailand and has a far healthier banking system with a lower
\nproportion of non-performing loans.<\/p>\n
Although not pleased with the peso fall, Buenaventura said it
\nis an \"aberration,\" and he says intervention under these
\ncircumstances isn't warranted.<\/p>\n
\"When (the peso) is being dragged down by the baht and the
\nrupiah, now is not the time to try and decouple them....it's
\nbetter to let the market seek its own level as it will eventually
\ncorrect,\" he said.<\/p>\n
The central banker said there appears to be some short-term
\nresistance in the peso around 41 peso, and with capital inflows
\nexpected to increase in the second half of the year through
\nremittances by Filipinos working offshore and foreign investment,
\nthere is little reason to step in.<\/p>\n
Buenaventura said the bank doesn't target any particular peso
\nlevel, so market conditions rather than the rate will determine
\nany intervention.<\/p>\n
\"But if there was some speculative movement, or some panic, we
\nwould step in to provide liquidity and smooth markets,\" he said.<\/p>\n
On the recent surge in the yen against most currencies that
\nhas concerned the Japanese government, but few others including
\nthe Bank of Japan, Buenaventura said Philippine companies have
\nmostly benefited.<\/p>\n
\"Exports are more attractive for the Japanese...there haven't
\nreally been any drawbacks because few local companies have yen-
\ndenominated debt, which highlights the differences with Thai
\ncompanies, which are quite heavily exposed,\" he said.<\/p>\n
With the brighter economic outlook, the IMF and Manila reached
\na draft plan to widen a budget deficit target for 1999 to 85.3
\nbillion peso from 68.4 billion peso originally.<\/p>\n
Buenaventura said the administration is planning a $500
\nmillion bond issue later this year to help finance the 1999 and
\n2000 budget deficits.<\/p>\n
The five- or 10-year bond likely will be in one tranche, and
\ncould be an asset-backed issue, although again the details are
\nyet to be finalized, he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rp-likely-to-enter-new-pact-with-imf-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}