Economy & Trade

Bloomberg sees PH as Asia’s turnaround story in 2019

Jan 17 2019 - The new year as a season of possibility is looking better and better for the Philippines.

Better than the SWS surveys that said that most Filipinos are looking at 2019 with optimism, and that more Filipinos rate themselves as poor, is Bloomberg’s upbeat report on the Philippine economy.

Yen Makabenta

The news agency and broadcast network projects that the Philippines will stage a comeback this year, and become “Asia’s turnaround story.” The story reads:

“After last year’s inflation shock, a 5 percent slump in the currency and a widening current-account deficit, pressure is starting to ease. Consumer-price growth slowed last month, the peso and stocks are rebounding, and the current account is set to remain manageable.

Economic growth is expected to exceed 6 percent and reserve buffers are among the strongest in global emerging markets, according to Moody’s Investors Service.

‘We’ve seen the worst in 2018,’ said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. ‘We are cautiously optimistic because we know we’re not there anymore.’

Investors will dive back into PH
“The benchmark Philippine stock index has risen more than 7 percent this year, the biggest gainer in Asia. The peso is up 0.6 percent to 52.3 per dollar, after being one of hardest hit by an emerging-market rout in 2018.

Goldman Sachs Group Inc. forecasts the peso will strengthen to 50 per dollar over the next 12 months, according to a note on Monday. The tightening in financial conditions last year should slow domestic demand and import growth, helping support the current account, it said.

‘There’s more room for the peso to rebound, with sufficient reserve buffers and quite solid fundamentals,’ said Koji Fukaya, chief executive officer at FPG Securities Co. in Tokyo.

The Philippines has the advantage of having low foreign debt obligations. External debt payments due this year and total non-resident deposits over one year are estimated at 25 percent of foreign reserves for 2019, the lowest among 19 emerging markets tracked by Bloomberg, according to Moody’s forecasts.

Remittances from Filipinos living abroad are a key pillar of support for the economy and the currency, amounting to 10 percent of gross domestic product. Those inflows probably rose 8 percent in November from a year ago as more people sent money home for the holidays, according to a Bloomberg survey ahead of data due Tuesday.

As economic fundamentals firm up, they should offset risks including a prolonged US-China trade war and an uptick in world oil prices, which hampered the economy last year.

‘The waters are no longer murky. Investors are ready to dive back into the Philippines,’ Ravelas said.”

Andaya the newsmaker
Another new year development of note is the mutation of House Majority Leader Rolando Andaya Jr. from congressional investigator of anomalies into a bigtime maker of news. He competes with President Duterte’s ability to grab media attention with insults and jokes. He also exceeds fake news specialists in generating frontpage news because he uses his position in Congress and deals with live public issues.

This week, it was impossible to avoid reading about Andaya in the front pages of newspapers and listening to him in the broadcast programs of TV networks.

Evidently, as a follow-up to his noisy tiff with Budget Secretary Benjamin Diokno, wherein he accused Diokno of channeling billions of pesos worth of public funds to his alleged in-laws in Sorsogon, Andaya has persisted in conducting a House inquiry into his allegations.

Diokno refutes Andaya charges
But Diokno has forcefully answered Andaya with a detailed refutation of the charges, that was published by the Manila Times in its issue of January 10.

In summary, the budget secretary declared that:
1. He does not facilitate the awarding of projects to a favored contractor because as budget secretary, he does not deal with contractors and does not meddle with project implementation.

2. He did not manipulate the budget to ensure the inclusion of projects in favored districts, particularly flood control structures under the Department of Public Works and Highways (DPWH).

The DBM is only in charge of setting the aggregate budget ceiling and individual budget ceilings for agencies during budget preparation.

3. The DBM is not involved in the allocation of DPWH projects by region, province or district during budget preparation. DBM only evaluates the targets, by program, based on their budget utilization rate in previous years.

4. Budgeting was opaque and transactional during Andaya’s term as budget secretary. Budget implementation was micro-managed.

5. By contrast, today’s budget system under Duterte and Diokno is rules- based. There is less discretion in budget releases during budget implementation because the DBM has adopted the GAA as allotment order (GAARD) policy since 2017; the GAA has served as the official fund release document for regular programs in the budget.

The DBM has made important steps to institute an open, accountable and rules-based budgeting system.

It has been rigorous in publishing budget information. It is for this reason that we are ranked first in Asia and 19th in the world for budget transparency.

Where will Andaya go now, given this reply? Who will listen to him?

Andaya’s new headlines
Andaya is undaunted, however. He persists in making news with startling claims by creating new headlines.

1. On January 14, he filed a petition for mandamus with the Supreme Court to compel Diokno to release funds under the fourth tranche of adjustments under the Salary Standardization Law (SSL).

Diokno replied that the DBM must wait for the passage of a new national budget by Congress because it is the legal basis for implementing the fourth tranche.

2. Andaya claimed that the DBM failed to include the Bangsamoro law plebiscite in the 2019 budget.

DBM retorted that the Bangsamoro Organic Law (BOL) plebiscite has adequate funding and will push through as planned. There are enough funds for the government to push through with the BOL plebiscite this month.

3. The Sandiganbayan on Tuesday rebuffed Andaya’s motion to dismiss 97 cases of graft and malversation of the P900-million proceeds of the Malampaya Fund against him.

Instead, the Sandiganbayan stood firm on its decision to refuse to dismiss a total of 194 criminal cases filed against Andaya, Janet Lim Napoles — the alleged Priority Development Assistance Fund (PDAF) scam queen — and several others.

They will be arraigned on Friday.

Presiding Justice and Division Chairman Amparo Cabotaje-Tang penned the resolution with the concurrence of Associate Justices Bernelito Fernandez and Lorifel Pahimna.

The Sandiganbayan found strength in the cases related to the alleged irregular diversion of funds from the Malampaya natural gas project to the relief and rehabilitation efforts in areas affected by typhoons “Ondoy” and “Pepeng” in 2009.

Andaya, who was the budget secretary of the Arroyo government at the time, allegedly released the funds through the Department of Agrarian Reform (DAR).

In his motion for reconsideration, Andaya contended that the graft and malversation cases against him lacked pertinent details.

The anti-graft court insisted that the elements of graft and malversation were aptly alleged in the information filed by the Office of the Ombudsman.

“A plain reading will show that the acts and/or omissions complained of are alleged in plain, ordinary and concise language. In fact, the specific participation of all the accused in the alleged Malampaya Fund scam is outlined in detail in each of the information in these cases,” the court said.

Newsmaker in victory and defeat
However these new issues pan out, Andaya has ensured for himself a place in the news.

Media attention will turn now toward these issues:
1. Will the Supreme Court throw out his petition to compel the release of the salary hikes?

2. Will Andaya retain his post as House majority leader? This is unlikely since he is running for a local government post in the May elections.

3. Will Andaya be convicted for his liability in the Malampaya fund fraud?

In victory or defeat, the media will have room in the news for Andaya.

This story was originally published by The Manila Times, Philippines

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  • Jorge Wynno

    Big words again. The truth is different. Corruption at all levels is all time high. Protectionist banking regulations discourage foreign businesses, investments into the Philippines. Peso is still not at the right level. Must be at minimum 55:1 vs US$. Too much chinese influence disgusting to the rest of the world.