PH shielded from Greek default effects

Finance Secretary Cesar Purisima. INQUIRER FILE PHOTO

The Department of Finance on Friday downplayed any potential effects of the Greek default on the domestic economy, citing the country’s strong fiscal position.

In a statement, Finance Secretary Cesar V. Purisima noted that while “emerging markets are expected to be at risk of capital flow reversal, which can be prompted by either loss of investor confidence, asset price shifts, increase in borrowing costs and foreign rate volatility” after Greece missed its repayment to the International Monetary Fund (IMF) last June 30, he claimed that the Philippines “stands as a pillar of stability in the region with a sound fiscal position decoupled from any spillover effects.”

Also, the country has “no significant exposure to Greece, having minimal trade with a mere 0.01 percent of total exports and only 0.02 percent of total imports from Greece” last year, Purisima pointed out, adding that remittances from Greece made up only 1.38 percent of the total flows.

According to Purisima, the wider fiscal space, tempered inflation, adequate reserves and a well-capitalized banking industry would shield the economy from external shocks threatening financial and price stability.

“The overall decline of the debt burden, strong external position and banking system, stable inflation, well-managed fiscal position and participation in cooperative frameworks sustain market confidence in the country,” Purisima said.

The Finance chief nonetheless said the country was prepared to navigate through challenges from the uncertainties brought by external risks and factors.

“We continue to develop measures fortifying the economic fundamentals we have built as well as increasing competitiveness in the country,” he said.

“While the Philippines stands in good stead to navigate the challenges not only from Greece but emerging bouts of uncertainties, it is imperative to stay on the course of reform and maintain vigilance to put the country on path of sustained, higher and inclusive growth,” he added.

Fear struck global financial markets as Greece was the first developed nation to miss a payment to the IMF and risks exiting from the eurozone.