MANILA, Philippines (Xinhua) - The Philippine government would have to significantly revise its economic projections, should there be a US default, a senior official said today.
"The Philippines would have to re-evaluate economic projections in light of a US default," Undersecretary of the Department of Finance and Chief Economist Gil Beltran said in a statement.
Beltran cited the International Monetary Fund which said that a US default can drive US long-term rates up by as high as 2 percent, crash US equity prices by 27 percent, and weaken the dollar by 13 percent.
The IMF also estimates that the US growth would likely be reduced by at least 7 percent.
"For every percentage point rise in US interest rates, Philippine interest rates rise by 0.80 percentage point," Beltran said.
"Also, for every percentage point rise in Philippine interest rates, the Philippines loses 0.36 of a percentage point in real GDP growth," he added.
The US Treasury said that the United States will reach the debt ceiling, currently set at $16.7 trillion, on Oct. 17.
This means that this is the last day when the United States will be able to meet all its obligations in full and on time given normal operations and given that all legal and prudent accounting measures have been exhausted.
The DOF said that should the United States reach the limit on its borrowings, it would then exhaust any available cash reserves to meet obligations, and it would be forced to choose whether to honor its outstanding obligations selectively, or to dramatically cut spending to meet all its liabilities.