PHILIPPINE NEWS SERVICE — ECONOMIC strategies and measures taken by her administration had given the country enough strength to weather the impact of the current global financial crisis, President Macapagal-Arroyo said yesterday.
Bangko Sentral Governor Amando Tetangco likewise downplayed the domestic impact of the crashes of US financial giants American Investment Group, Merrill Lynch and the century-old Lehman Brothers saying Philippine banks’ exposures to these investment firms are small.
Mrs. Arroyo also credited the Filipinos’ natural ability to roll with the punches for enabling them to survive in times of adversity.
“While no one can predict the future during these uncertain global economic times, it seems that our measures at home are seeing us through the toughest times as we prepare for a day with lower global fuel and food prices,” the President said in her speech at the mid-year Philippine Economic Briefing at the Makati Shangri-La Hotel.
“Even as some external challenges are letting up, we will continue to focus on reigning in inflation, bringing down prices of the most essential commodities, increasing targeted investments to our poor and getting our economic engine moving to a higher gear,” Mrs. Arroyo said.
“We will work hard also to strengthen the banking system, improve our fiscal health, encourage investments in our most promising growth sectors and expand our potential sectors. We have a targeted strategy for food self-sufficiency, for less energy dependence, for greater self-reliance in our attitude as a people and our posture as a nation,” she added.
The President said the Filipino people are coping with the adverse effects of high prices of oil and basic commodities in the global market among other effects of the global economic meltdown because of the “foresight plan” of her administration.
She cited the controversial value added tax law, the proceeds of which are being used to give relief to the poor through direct assistance or subsidies. The government had allocated P18 billion from the VAT windfall as subsidies or assistance for education, senior citizens, electricity, fuel,micro-financin g, upgrading of hospitals and calamity areas.
She also vowed to build a stronger and healthier economy as part of her reform agenda.
“Our reforms have helped us in this time of global economic upheaval. Without them, we would not be as confident as we are that our economy will withstand these external shocks,” she said.
The President also hailed the resilience of the Filipino people, saying they are “fighters, naturally optimistic and we don’t quit.”
“The global economy may have knocked us down but we have gotten up off the mat and dusted ourselves off,” she said.
Philippine banks have only a small exposure to the collapsed Lehman Brothers investment bank and will not be severely affected by the turmoil rocking Wall Street, according to Tetangco.
The central bank chief said he met senior officials from other banks who told him their exposure to Lehman Brothers “is small, relative to the capital of the banks.”
He told an investors’ forum that the exposure was “spread out among several banks,” and was equivalent to about 0.3 to 0.4 percent of total assets of the banking system.
Tetangco said the local banks had “benefitted from reforms like increased capitalization and improved risk management,” which shielded them from the turmoil affecting Lehman Brothers and other US financial institutions.
The announcements by some major banks that they had set aside provisions to cover their exposure to Lehman Brothers, was a positive sign because “it shows that they have the reserves to absorb whatever happens.”
Meanwhile, the Social Security System said all its investments are in the local market, which has been profitable, and it expects to earn a record P26 billion from investments this year.
Although the pension fund is allowed to invest abroad, it has not done so because of the unfavorable investment climate, SSS spokesman Joel Palacios said.