Residents evacuate Friday, May 26, 2017 in Marawi City. Ongoing clashes between government security forces and ISIS-linked militants forced massive exodus of terrified residents in the city. Jeoffrey Maitem / INQUIRER MINDANAO
Despite the unrest in Marawi City that led to the declaration of martial law in Mindanao, the Department of Finance said yesterday that the economy remained unaffected given its 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 Duterte’s declaration of martial law in Mindanao,” said Finance Secretary Carlos Dominguez III, who heads the Duterte administration’s economic team.
Dominguez noted that the Philippine Stock Exchange index (PSEi) 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 and touched the 50 level last Wednesday.
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 to] $7.93 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’ worth of import cover, remained “healthy.”
De Leon also noted that the government’s fiscal position remained strong and 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 is 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 on peso funding, taking advantage of ample liquidity,” De Leon further said.
On Thursday, Dominguez said the economy was 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, President 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 would help slash the poverty incidence on 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.