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- Category: Top News
- Published on Wednesday, 13 February 2013 20:41
- Written by Paul Anthony A. Isla | Reporter
WITHOUT doubt, Budget Secretary Florencio B. Abad said on Wednesday, the Philippines will soon reach investment grade. Toward that end, Abad added, the Aquino administration is determined to create an environment that will not only facilitate the credit-rating promotion but also ensure sustainability and inclusiveness of the country’s growth.
He cited at the Philippine Economic Briefing the government’s strong fiscal strategy, continued commitment to key reforms and mounting investor confidence in the Philippines as a major investment hub in Southeast Asia.
“We’ve already posted 11 favorable credit actions since the Aquino administration began its work of socio-economic reform, thanks to our strong economic fundamentals and robust fiscal management strategy, as well as our dedicated drive for improved governance,” Abad said.
He underscored the significance of an investment-grade rating for the Philippines, particularly in view of the administration’s goal to bring about inclusive growth in the country.
“Achieving investment grade will result in improvements in our risk profile, as well as cement the Philippines’s reputation as a most promising investment destination. The result? Greater private-sector confidence in the country’s economic and political capacity, more jobs and a country of empowered citizens who finally have direct access to the benefits of good governance,” Abad said.
According to him, the government is keenly anticipating a year of improved efficiency and transparency in the management of public funds, even as they align their budgetary priorities with President Aquino’s social contract with the people to ensure high-impact expenditures.
Abad said zero-based budgeting and other reforms that they had instituted will be enhanced by other initiatives.
“One of these is our careful transition toward a regime where the General Appropriations Act will stand as the release document. This removes us from the circuitous process of requesting and approving fund releases across the year, all while making plain where public funds are directed to,” he added.
Abad said they have also shortened the lifespan of appropriations to just one year, which will spur departments and agencies to make swift use of their available budgets and facilitate quick and efficient delivery of goods and services to the public.
Philippine stocks, bonds and the peso rose also on Wednesday on optimism that economic growth and stable inflation will help the nation win its first investment-grade credit rating.
The Philippine Stock Exchange index headed for a record-high close and the yield on 10-year government debt fell to a two-month low as Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said that the country can win a credit upgrade this year. Moody’s Investors Service, Fitch Rating and Standard & Poor’s rank the Philippines at the highest junk grade. The country’s $225-billion economy expanded 6.6 percent in 2012, the most in two years. Annual inflation was 3 percent in January, little changed from 2.9 percent in December.
“The market is anticipating an upgrade and is putting to work the flush liquidity in the system,” said Dave Estacio, an assistant vice president at First Metro Investments Corp. in Manila.
The benchmark share index climbed 0.7 percent to 6,505 as of 11:03 a.m. in Manila. The measure rallied 12 percent this year, beating a 3.4 percent gain in the MSCI Asia-Pacific Index.
The yield on the 4-percent peso bonds due December 2022 fell five basis points, or 0.05 percentage point, to 3.725 percent, the lowest since the notes were first sold two months ago, according to Tradition Financial Services.
The peso rose 0.1 percent to 40.65 per dollar, according to Tullett Prebon Plc. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, held at 4.25 percent.
Inflation is expected to range from 3 percent to 5 percent until 2015, Guinigundo said at the economic briefing.
“This means Bangko Sentral will have enough monetary space for providing an environment where credit and liquidity growth will remain supportive of economic activity,” he added.
Gross domestic product (GDP) will likely increase 6 percent to 7 percent this year and even faster in 2014, spurred by consumption and spending, socioeconomic Planning Secretary Arsenio Balisacan said at the same forum in Manila.
Improving government revenue will help boost spending on infrastructure to 5 percent of GDP by 2016 from the current 2 percent, Finance Secretary Cesar Purisima said also on Wednesday.
Universal Robina Corp. advanced to a record after the nation’s largest snack food-maker and bottler of iced tea said that its margins improved to 11.6 percent in its fiscal first quarter, from 10.9 percent a year earlier. Metropolitan Bank & Trust Co., the nation’s second-largest bank by assets, rose 1.3 percent to an all-time high after the central bank approved its proposed 5-percent cash dividend.
Last year’s budget deficit may have reached P235.3 billion ($5.8 billion), or 2.2 percent of GDP, according to Purisima’s presentation at the briefing. That compares with the 2011 shortfall of P197.8 billion.
Bloomberg
In Photo: (From left) Tourism Secretary Ramon Jimenez Jr., Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo, Trade Secretary Gregory Domingo, Finance Secretary Cesar Purisima, Budget Secretary Florencio Abad, Socioeconomic Planning Secretary Arsenio Balisacan, Public Works Secretary Rogelio Singson and Agriculture Secretary Proceso Alcala field questions at the Philippine Economic Briefing held on Wednesday at the Philippine International Convention Center in Pasay City. (Roy Domingo)
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