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TWO recent reports affirming the Philippines’ sound
macrofundamentals show the resilience of domestic growth in the face
of the turmoil in global financial markets and the looming slowdown
of the United States economy, both triggered by the problems in
America’s housing sector.
The first of the two reports
issued last week by Standard & Poor’s maintained the
Philippines’ credit rating at below investment grade with a stable
outlook, citing lingering difficulties in government’s tax
collection efforts. This means that any government borrowing for at
least the next six months would still be charged higher than usual,
translating to a heavier debt burden for Filipinos, all other things
equal.
Despite its rating action,
S&P acknowledged that the domestic economy remains strong thanks
largely to strong dollar inflows from overseas Filipino workers,
foreign investors and foreign buyers of Philippine-made goods.
High dollar inflows have boosted
the country’s reserves to above official full-year forecast as
early as the middle of this year. The central bank has since raised
its forecast, but the latest data showed that actual inflows again
breached the new threshold.
High foreign exchange inflows
have led to the peso’s appreciation, in turn, keeping price
increases manageable. With inflation at record lows, interest rates,
likewise, have sunk to lows unseen in decades.
The low rates combined with
banks’ modest success in disposing of their bad assets give easier
credit access to businesses and households, whose improved spending
has lifted the economy to a two-decade high in the second quarter.
Government is cranking up infrastructure spending, thus providing
the third leg on which to prop up the domestic economy.
The second report by the Asian
Development Bank early this week showed that Asia is poised to grow
at a faster pace this year and next, thus cushioning the negative
impact of a US slowdown in the region. We have a healthy and growing
intraregional trade to thank for this, as can be seen from the
progress in the Asean Free-Trade Area and in that group’s economic
engagements with Japan and China, among others.
It is against this backdrop of
glowing economic prospects that we view with concern the heating
controversy over the National Broadband Network (NBN) contract.
Based on the tone of the Senate’s inquiry into this contract, the
issue is shaping up to become yet another challenge to the
legitimacy of the Arroyo administration.
While we believe in the principle
of checks and balance, and the need to penalize any wrongdoing
involving this contract, we should let due process take its course
and resist reckless moves that would only throw the Philippine
polity in disarray.
We know from history that ugly
politics only serve to stall the economy. We cannot let that happen
just when growth is poised to accelerate. We caution legislators and
all those bent on seeing justice served with regard to the NBN
contract to stay the course of constitutional processes. And,
please, stick to the facts.
The Philippines as a developed
nation
WE make use of this space to
promote The Manila Times national writing contest on the subject,
“What would it take for the Philippines to become a developed
country?”
The contest is open to young
Filipinos in two categories. Category A is for ages 12 to 15 where
the contestants shall write an essay of 800 to 1,000 words. Category
B is for youths aged 16 to 20, and they are asked to submit an essay
of 1,000 to 1,200 words.
The prizes are modest but the
honor attached to winning and the publication of the winning essays
must sound appealing. The deadline for submission of entries is
December 15, 2007.
The Times publishes the entire
rules from time to time and we urge our young readers to look them
up in future issues or on our website, www.manilatimes.net.
The ideal of a developed country
or First World economy for the Philippines has long obsessed our
national leaders, lawmakers, economists, policymakers and, yes, the
young.
President Arroyo, in her latest
State of the Nation Address, expressed confidence the Philippines
would become a developed country 20 years hence.
We are cheered by experience and
history. Many developing nations in Asia and the other continents
have metamorphosed from “underdeveloped” countries to developed
ones.
Our economic performance in the
past two years is one of continuous growth. Foreign businessmen,
economists, leaders and the foreign media were the first to notice
our development and to acknowledge the good work of the President
and her economic managers.
Of course the main engine is the
private sector with government setting economic policy and
direction, and Filipino labor, particularly the overseas workers,
providing the muscle and the skills.
What would it take for the
Philippines to be a developed country? Already we are hearing words
of wisdom from young Filipinos who were asked that question.
Achieve 8 to 10 percent annual
growth for 10 consecutive years.
Develop a prodigious export
sector.
Grow from a service to a
manufacturing economy.
Send corrupt officials and tax
cheats to jail instead of making press releases.
Make education truly universal so
that every child is able to go to school and succeed until he
graduates.
There is a lot we could do to
become a First World country. We have begun. Let’s continue
building, growing and innovating, working together and pushing ahead
with less partisan politics and less discord in our life.
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