‘Politics pulling down economy’

Political infighting is weighing down the economy and sending the peso down near its all-time low, Finance Secretary Jose Isidro Camacho said yesterday after meeting with portfolio investors.

"All these political events and political noise are obviously hurting us because it tends to undermine confidence in the Philippines, which is unfortunate," Camacho told reporters.

The peso has weakened even further, trading at 55.05 to the dollar late yesterday from 54.96 on Monday. Its historic low is 55.75 to the dollar, the level seen on Jan. 17, 2001 when a popular revolt toppled then President Joseph Estrada.

Camacho said that in a meeting with foreign portfolio investors in Paris, London and Singapore last week, he found they had a "fairly positive view" of the Philippines, citing a strong revenue performance and respectable economic growth this year.

Even the failed military mutiny by some 300 rebel soldiers on July 27 was not too worrisome to the investors, Camacho said, remarking that most of the country’s financial markets "had already normalized," since then.

He said the investors were "accustomed to these kind of events in other emerging markets... so it does not play as important a consideration to them as the fundamental economic numbers."

However, domestic sentiment over the economy is still being adversely affected by bitter political squabbles that have broken out in the wake of the failed July 27 mutiny, Camacho said.

He was apparently referring to opposition charges of corruption against President Arroyo’s family as well as rumors of a new destabilization plot against the government.

"This is the reason why the peso-dollar rate continues to be under pressure — because of the dominance of domestic players who are affected by the political noises that we hear, that we read in the newspapers," Camacho said.

He described the situation as "really frustrating" because foreign portfolio investors were happy with the economy and government reforms.

Camacho said there was some concern over the continuity of government policies after national elections in May 2004.

Mrs. Arroyo has said she will not run in the May elections so she could focus on economic reforms but she is widely expected to reverse this position. — AFP