|
BANGKO Sentral Governor Amando Tetangco hosted
breakfast for the Tuesday Club yesterday at the Shangri-La EDSA
coffee shop. Next door, the Chamber of Automotive Manufacturers Inc.
(Campi) headed by Elizabeth Lee was holding its ex-com meeting.
Tetangco has completed 18 months
as BSP governor. And he has done a good job. The economic numbers
are up and or improving. In 2006, he said, the GDP “continued a
pattern of broad-based expansion, with the services sector recording
the strongest performance. Fiscal reforms and disciplined
macroeconomic management continue to yield strong dividends, with
the fiscal deficit well below the target for the year. Monetary and
banking policies generated positive results in the form of slower
inflation, declining interest rates, a stronger peso, a comfortable
buffer of international reserves on the back of strong inflows from
export receipts, OFW remittances and foreign investments.”
OFWs remitted a record $14
billion last year. Foreign investments amounted to $2 billion.
Inflation is down to 4 percent to 5 percent this year from 6.2
percent last year and 7.6 percent in 2005. The 91-day T-bill rate
yield is down to 5.35 percent in 2006 from 6.36 percent in 2005 and
7.34 percent in 2004. Foreign reserves are at historic high $23
billion, equivalent to 4.4 months of imports.
Economic growth as measured by
the rise, in real terms, of the gross domestic production will be 6
percent this year, from an estimated 5.4 percent in 2006, 4.8
percent in 2005 and 5.0 percent in 2004.
Nonperforming loans ratio (at
below 7 percent) of banks is the lowest in nine years. Banks have
P16 of capital for every P100 of loans or liabilities. The minimum
capital adequacy is P10. Banks in this country are very lucky. They
are allowed to expand their business 10 times their equity. Try
borrowing 10 times your money from the banks. You are sure to be
rejected, unless you come across.
The BSP prepaid $220 million in
loans to the IMF, in effect declaring independence from one of the
most high-profile institutions of colonialism in this world or as
the BSP put it, “four and a half decades of financial
arrangements.” One of the things that amaze me with our government
is why we sell our sovereignty in exchange for a pittance from the
IMF. Lucio Tan or Danding Cojuangco or George Ty can very well lend
$220 million to Manila and not demand so much in blood, sweat and
tears from the Filipino people. Why? Because if something goes
wrong, you can always point to the IMF as the culprit, not your
incompetence or lack of foresight.
Last year 19 percent of people
surveyed said they experienced hunger. That’s 16.3 million
Filipinos out of 86 million. Fifty-two percent said they are poor,
more than twice the 27-percent poverty incidence admitted to by
government.
And if interest rates are indeed
low and therefore capital is cheap, how come hardly anybody is
borrowing to put up or expand his business? If the investment
climate is warm and we have the right investment policies, how come
all the three major credit-ratings agencies—S&P, Fitch and
Moody’s—consider the Philippines below investment grade? No just
one or two rungs below, but as deep as three rungs.
And why do we bother with these
ratings agencies? If they give the Philippines an investment grade,
all we get is $2 billion in foreign investments and another $2.5
billon in foreign loans. Our hardworking OFWs bring in $14 billion,
almost three times what investors and lenders bring in during a good
year.
And yet what do we do with our
OFWs? We actually reduced their income, by more than 10 percent, by
strengthening the peso, from P56 to $1 to less than P50 today.
Before, $14 billion times P56 was P784 billion; now, $14 billion
times P50 is P700 billion. The loss is a whopping P84
billion—exactly the amount of additional collection by increasing
the VAT from 10 percent to 12 percent.
In effect our people have been
hit by a double whammy—our eight million OFWs lost P84 billion
while those inside the Philippines had to pay an additional P84
billion in taxes because of the 12-percent VAT. What a country!
E-mail
lopez_biznewsasia@yahoo.com
|
