Philippine Markets: 12 October 2011

12 October  2011

USD/PhP:    43.405 -0.065           PSEi:       4119.71   + 10.44
USD/JPY:    76.47             PFINC:              930.88   +   2.58
EUR/USD:    1.3767                  BDO:                  52.85    -   0.10
GBP/USD:    1.56668                 BPI:            56.20    +  0.10
PDSTF3M:    2.8304                  MBT:            67.50    +  0.50
Prices as of  4:00pm                Source: Bloomberg, Reuters


Philippine president: stimulus package not to hurt fiscal health

MANILA, Oct 12, 2011 (Xinhua via COMTEX) -- By Prime  Sarmiento

    Philippine President Benigno Aquino III said that the 72
billion pesos (1.66 billion U.S. dollars) stimulus package
would cushion the economy from the impact of an uncertain
global recovery, but assured that this will not be done at the
expense of the country's fiscal health.
    "We will do what we can within the bounds of fiscal
prudence to keep the economy growing," Aquino said in
Wednesday's briefing organized by the Foreign Correspondents
Association of the Philippines (FOCAP).
    Aquino said that the stimulus package, which will finance
reconstruction plans and infrastructure projects, will be
financed by government savings and not by additional borrowing
that may widen the country's deficit.
    The country's economic managers have programmed this
year's fiscal deficit at 300 billion pesos (6.94 billion U.S.
dollars), equivalent to three percent of the country's GDP. The
country's budget gap for the months of January to August
narrowed to 34.5 billion pesos (81.8 million U.S. dollars),
from last year's 228.10 billion pesos (5.27 billion U.S.
dollars) on back of increased tax collections and prudent
government spending.
    According to Aquino, whether the government will extend
another stimulus package would depend on two things: government
savings and the absorptive capacity of different agencies that
will be utilizing the funds.
    "Going beyond that might not be productive at this point
in time," he said.
    Thanks to its strong fundamentals, the Philippines is one
of the few countries that stayed resilient amid global
recessions.
    This year, the eurozone debt crisis and the sluggish U.S.
growth are not the only factors threatening global recovery.
The natural disasters that rocked Japan and the political
turmoil in the Middle East and North African countries
exacerbated global economic woes.
    Philippine export revenues are on a downtrend for the past
few months owing to lower demand from major export markets of
Japan, the United States and European Union.
    As this developed, Socioeconomic Planning Secretary
Cayetano Paderanga said in a Senate hearing that the GDP growth
this year will be between 4.5 to 5.5 percent, lower than the
earlier five to six percent growth target under its budget
assumptions for the year. Multinational institutions World Bank
and Asian Development Bank, likewise, lowered their GDP
forecasts for the Philippines given the economic woes in the
United States and Europe. The World Bank and ADB cut its growth
forecasts for the country to 4.5 percent and 4.7 percent,
respectively.
    But Aquino is optimistic that despite such challenges, the
Philippines will be able to move on.
    "We are not sure exactly what the negative effects of the
world 's economic turmoil will have on us since it is still a
developing story. But a 72 billion pesos (stimulus package)
will have its own multiplier effect and this pump primes the
economy to that extent, " he said.
    Aside from a stimulus package, Aquino said strengthening
trade ties with other developing economies including China,
India, Brazil and ASEAN will also keep the economy growing.
    He also assured that several infrastructure projects bid
via the Public Private Partnership program will be awarded in
January next year.