'Failed coup a setback for economy'

'Failed coup a setback for economy'

Teresa Cerojono, Associated Press, Manila

A failed military mutiny over the weekend will have a long-
term negative impact on the country's struggling economy and
scare away foreign investors, the finance minister said on
Wednesday.

The immediate impact, though, on currency and stock markets
was not as bad as the government anticipated, Finance Secretary
Jose Isidro Camacho said.

"What's more worrisome is the longer term effect of the
mutiny," he told DZRH radio station. "There can be no denying
that the mutiny was a setback."

President Gloria Macapagal Arroyo acknowledged on Tuesday that
Sunday's rebellion in Manila's financial district dealt "a
setback in confidence," but insisted that political stability and
national security were unimpaired.

"There was no one hurt, no properties were destroyed and the
mutineers are back to barracks," presidential spokesman Ignacio
Bunye said. "The important thing is our economic fundamentals are
on very sound footing."

In trading on Tuesday, the peso fell for the third consecutive
session to close at a four-month low against the U.S. dollar at
54.670 pesos. The benchmark Philippine Stock Exchange Index on
Tuesday ended down 2.5 percent at 1225.23, its lowest close in a
month.

The peso slipped further early on Wednesday, opening at 54.77
against the dollar. Philippine shares were also lower, down 5.19
points, or 0.4 percent, at 1219.82, traders said.

"The peso depreciation, and stocks' decline were just
immediate reactions," he said. "Over at the stock market, it
wasn't as bad as we expected. In fact, while there was some
selling, there were also those who were buying up stocks."

About 300 junior officers stormed a ritzy commercial complex
in Manila early Sunday and wired it with explosives to demand the
government's resignation. The standoff ended peacefully 19 hours
later.

Camacho said it was a relief that the mutiny was short-lived
and resolved without bloodshed.

"Over the weekend, everyone was worried and expecting the
worst, especially if the mutiny was prolonged," he said.

Camacho said it may take some time before investor confidence
returns to the country and that the government would have to
increase law and order to draw investors back.

He warned that giving additional fiscal incentives to draw
back investors could have a negative impact on the budget
deficit.

"We also cannot be careless over our fiscal deficit," he said.

Tighter spending in the first half, combined with improved
revenue collection, enabled the government to rein in the budget
deficit for the January-June period to 79.58 billion pesos
(US$1.45 billion), well below the 102.2 billion peso ($1.86
billion) ceiling for the period.