RP not Argentina — Purisima

The Philippines on Sunday rejected comparisons with Argentina’s economy, saying much of Manila’s debt burden is in long-term obligations while tax revenues should grow with new tax measures.

These "help ensure that the Philippines will be able to honor its international obligations and should not be compared with Argentina," Finance Secretary Cesar Purisima said in a statement.

Manila bristled at the reported statements of a Moody’s Investors Service analyst, who it said classified the two economies under one basket.

Moody’s cut the Philippines’ sovereign ratings by two steps in February to four rungs below investment-grade, citing a damaging build-up of public debt.

Congress has since passed long-delayed amendments to value-added tax (VAT).

The finance department insisted that comparing the economies of the Philippines and Argentina was "much like comparing apples with oranges."

Philippine economic growth had been on an uptrend since 2001, unlike Argentina, which suffered a three-year recession before it defaulted on its obligations, it said.

"Proper debt management puts the average maturity profile of the country’s medium to long-term external debt at 17.1 years," it said, with average annual maturities at between $5 billion and $6 billion.

This "allows it to buy time for the government from diverting resources to repay maturing principal debt while it resolutely addresses the economy’s structural weaknesses."

Balance of payments inflows are steady with growing remittances from an overseas Filipino work force, while Manila’s larger external sector gives it greater flexibility to service foreign debt. Manila’s 2004 exports were equivalent to 45.8 percent of gross domestic product. — AFP