The Asian Development Bank has advised the Philippines and other countries in the region to improve revenue collection and strengthen their finances to better cope with the adverse impact of what could be a prolonged debt crisis in the eurozone.
The multilateral lending agency said the crisis in Europe was seen to persist through 2012 and countries in Asia and the Pacific were likely to feel the pinch in the form of declines in exports and tourism earnings as well as a drop in foreign investments.
The ADB said governments “should make sure that their finances are in good shape in case they need to act to counter the impact of slower global growth in the future.”
With better fiscal positions, governments could spend more on infrastructure, social services and other developmental initiatives that could temper the adverse impact of the crisis in the West.
In the case of the Philippines, the national government has improved its revenue collection so far this year. Documents from the Bureau of the Treasury showed that from January to October, revenues reached P1.12 trillion, up nearly 13 percent from P993 billion in the same period last year.
This helped reduce the budget deficit to P74.25 billion, or about 73 percent lower than the P270 billion incurred in the same period last year.
European policymakers have come up with various austerity measures and raised bailout funds to help address the debt crisis in the eurozone. Nonetheless, the international financial community believed that fully solving the crisis would take time.
In fact, some credit-rating firms have warned of potential downgrades of credit scores of euro zone economies given the outlook that the crisis would linger in 2012.
Asian countries, which are expected to continue driving growth of the global economy next year, were advised to increase trade among one another to lessen dependence on European countries and thus reduce vulnerability to the euro zone crisis.
Intraregional trade among Asian countries has risen in the past few years, but economists said there was room for more trade among them, citing for instance the sustained rise in demand by China.
Export incomes of emerging Asian countries have fallen this year due to the crisis in Europe.
Export earnings of the Philippines dropped 4.3 percent to $41.29 billion in the first 10 months of the year from $43.15 billion in the same period last year. The decline was led by electronics, the country’s major export product.