DOF: PH economy’s buffers ample to withstand unrest in Marawi City

Finance Secretary Carlos Dominguez III ALBERT ALCAIN/PRESIDENTIAL PHOTO (FILE)

Despite the unrest in Marawi City that led to the declaration of martial law in Mindanao, the Department of Finance (DOF) said Friday that the economy remains unaffected given sufficient buffers that would outweigh any adverse effect of the terror attack.

Last Thursday, “the country’s solid macroeconomic fundamentals buoyed the local bourse and the peso despite President Rodrigo Duterte’s declaration of martial law in Mindanao on Tuesday night,”  Finance Secretary Carlos G. Dominguez III, who heads the Duterte administration’s economic team, said in a statement.

Dominguez cited that the Philippine Stock Exchange index rose 0.43 percent or 33.8 points to close at 7,871.65 on Thursday, while the peso recovered to 49.83:$1 after it weakened to 49.995:$1 and touched the 50:$1 level last Wednesday.
READ: Martial law in Mindanao won’t impact economy, says Finance chief

The DOF quoted National Treasurer Rosalia V. De Leon as saying that “the Philippines’ ample buffers positioned the country to weather changes in global environment,” adding that “the nation’s external debt-to-gross domestic product (GDP) at 24.5 percent is one of the lowest in the region.”

“The country has a current account surplus since 2003, while its net foreign direct investments [amounted] $7.933 billion in 2016, which is higher by 41 percent year-on-year,” De Leon added.

Also, De Leon pointed out that year-to-date gross international reserves of $81.8 billion, equivalent to nine months of import cover, remain “healthy.”

De Leon also noted that “the government’s fiscal position remained strong and is well-managed with only 2.3 percent deficit-to-GDP as end-March this year, while its debt-to-GDP ratio stood at 41.9 percent.”

“The government’s average maturities are over 10 years and we have declining vulnerability to foreign exchange shocks with only 34.2 percent share of foreign-exchange debt to total. We continue to increase our reliance to peso funding taking advantage of ample liquidity,” De Leon further said.

Dominguez also said “the economy is in no way threatened by the imposition of martial law.”

“Martial law will ensure that these facilities [government installations and major infrastructure] are protected so that business transactions will be unaffected,” Dominguez added.

According to Dominguez, Duterte himself committed the government to do “anything and everything” to end violence in Marawi City as well as “restore normalcy in the affected areas as quickly as possible so as not to affect the economy.”

While Marawi is Lanao del Sur’s business and economic center, Dominguez said that “the threats by lawless elements are contained in areas far from Mindanao’s major business centers and the military is doing everything to minimize these.”

“Martial law in Mindanao for a limited period is intended to protect the flow of commerce, protect the innocent and eliminate future threats to the communities,” the Finance chief said.

Also, Dominguez said that pursuing peace and order in Mindanao will help slash the poverty incidence in the war-torn island.

“The President is determined to protect the lives of innocent civilians and he will apply everything within his legal means to stop these extremist terrorist groups from further threatening the people of Mindanao and undermining government efforts to lift people up from poverty and transform Southern Philippines into a major growth center and investment destination,” according to Dominguez.

For Dominguez, “threats of violence in the poorest regions of the country will not affect adversely the economic position of the whole country,” citing that since “the centers of commerce and sources of growth are in areas far away from the sites of potential conflict, economic expansion will not be jeopardized and economic opportunities will remain robust.”

“These threats will, however, dampen the economic prospects of the poorest regions. The government plans to revive this regional economy and transform it into a meaningful participant in the country’s growth will be held in abeyance until lasting peace is attained,” Dominguez said.

Citing Department of Finance data, Dominguez said the Autonomous Region in Muslim Mindanao, where Marawi is located, accounted for a mere 0.6 percent or P50.6 billion of the P8.1-trillion GDP last year, the smallest share among the country’s 17 regions.

The entire Mindanao contributed 14.4 percent to last year’s GDP, as it grew 6.4 percent year-on-year in 2016 or faster than the 5.8-percent growth in 2015. JPV