Government focuses on eco fundamentals

MANILA, Philippines - The Aquino administration will continue to improve the business environment and investment climate as this would help cushion the economy from the impact of a euro crisis, Finance Secretary Cesar Purisima said.

He said the government is focused on improving the country’s economic fundamentals.

“We’re focused on the fundamentals. We believe good things will happen,” Purisima said.

He believes that the government’s improving fiscal position would help the Philippines should a contagion in the Eurozone erupt.

An improving fiscal position can provide room for additional spending to stimulate the economy if a crisis in Europe escalates.

In the event that the debt crisis in Europe escalates, fiscal officials said, Philippine exporters may be affected through higher borrowing cost. Some European banks may find it difficult to extend credit lines to some of these private exporters.

 The Philippine economy, as measured by gross domestic product (GDP), grew by 6.4 percent in the first quarter of the year, surpassing analysts’ expectations and beating year-ago figures of 4.9 percent.

The government is aiming to grow the economy by a range of five percent to six percent this year but external developments in Europe pose threats to growth.

On the fiscal front, the government is aiming to contain the deficit at P279 billion this year.

It has a program to raise P1.56 billion in revenues this year and to disburse P1.839 billion for the year.

A debt crisis is simmering in the euro zone, sending jitters to banks and investors on sovereign finances.

Debt-saddled Greece wants to leave the euro, a move that could affect the credit ratings of other European countries such as Cyprus, Portugal, Ireland, Italy and Spain, said global debt watcher Moody’s Investors Service.

Moody’s also said that a Greek exit from the euro could pose a threat to the currency’s existence.

It also means Greece is going to default on its debt and leave the European banking system saddled with debts.

A crisis could scare off investors who are expected to shy away from other neighboring countries such as Spain, Portugal and Italy.