RP cannot be next Argentina — PSE

The statement made by Moody’s Tom Byrne that the Philippines’ finances are in worse shape than Argentina’s in 2001 is unfounded, unfair and irresponsible, chided Philippine Stock Exchange (PSE) president and chief executive officer Francis Lim.

Lim cited the recent $750-million government raised through the re-opening of its 10-year and 25-year bonds, with the offering eight times oversubscribed.

"The market’s tremendous interest in our bond offering clearly disproves the observation. Surely, no investor would have been interested at all in our bond offering if the statement were true, " Lim added.

"Who should you believe more – the market or snide comment of one man," asks the PSE president. Lim was referring to Moody’s Tom Byrne who made the observation during a break of ADB’s annual meeting last week.

"I’m not even sure whether the statement represents the opinion of Moody’s or Mr. Byrne’s personal opinion," added the PSE president.

Furthermore, Lim referred to the country’s escalating gross national product (GNP) and gross domestic product (GDP) over the last three years, as opposed to Argentina, which experienced negative growth for three consecutive years before it defaulted in 2001.

The Philippines GDP grew 3.1 percent in 2002, 4.7 percent in 2003 and 6.1% in 2004 while its GNP rose 3.2 percent in 2002, 5.6 percent in 2003 and 6.1 percent in 2004.

The PSE chief also underscored the longer maturity of the country’s government’s debt, which averages at 17 years, compared to Argentina’s short-term maturity on its borrowings.

"The recent passage of the VAT Law further weakens Moody’s comment," Lim stressed.

"The PSE has faith in our government’s ability to handle the country’s fiscal situation and there should be no basis to compare it with that of Argentina in 2001," he concluded.