Gov’t not worried over pullout of investors

MANILA, Philippines - The Aquino administration is not worried over the recent pullout of investors from the local financial markets, vowing to continue spending to buoy economic growth as far as its fiscal ability would allow, Finance Secretary Cesar Purisima said yesterday.

 â€œI am not concerned because Philippine economic fundamentals are good and improving… The Philippines is much better and stronger than it was in 2008,” Purisima said in an e-mail to reporters yesterday.

Financial markets have been rattled in the past week amid investor worries the US Federal Reserve would scale back its huge bond buying program.

On Thursday, the Philippine Stock Exchange index, one of the world’s best performers last year, lost 6.75 percent of its value in its worst single-day drop since October 2008, a month after the global financial crisis sparked.

It recovered on Friday, adding 2.18 percent or 128.18 points to settle at 6,242.26.

Just like Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., Purisima stressed “good fundamentals” will keep the Philippines afloat which will soon drive investors back or at least, better absorb capital outflows.

The “expanding fiscal space,” he said, will also allow the government to “increase investments in our people and infrastructure” to support growth in the coming quarters.

State spending was one of the key drivers of the stellar first-quarter economic growth. It expanded by 13.2 percent, according to the National Statistical Coordination Board, supported mainly by the wide government fiscal space.

In April, the government reported it posted a budget surplus of P36.803 billion, the widest on record, on the back of double-digit growth in revenues. A surplus indicates more revenues were collected than spent.

The April figure trimmed the deficit tally for the first four months to P29.675 billion. A deficit cap of P238 billion was set for the year, equivalent to two percent of economic output. 

In addition to better disbursements, Purisima said the government is also focused on making the business environment “more attractive” to investors by “addressing policy and process bottlenecks.”

He did not go into specifics, but with nine out of the 12 new senators affiliated with the administration, observers have said it would be easy for the government to pass measures it considers part of its reform agenda.

 â€œWe have proven that going up the path of better governance is the key to unleashing the demographic and natural potential of our economy,” Purisima said.