Growth path hinges on 3 fundamentals identified by Aquino

November 26, 2010 2:09 am 

MANILA, Nov. 25 — The government’s economic team is basing future growth targets on three fundamentals identified by President Benigno S. Aquino III.

In a press briefing after the launch of the new P500 notes at the Premier Guest House of Malacanang on Thursday, Finance Secretary Cesar Purisima said the three fundamentals include getting rid of corruption, improving the bureaucracy and infrastructure development.

Purisima said the team will let the private sector do its part under the private public partnership (PPP) because “we believe that if we give the private sector a predictable environment, level playing field and transparent way of doing things we will be able to gain the private sector’s confidence so they can make more investment.”

The President recently launched 10 infrastructure projects to be covered by the PPP where the private sector can invest.

Purisima said growth can happen based on the ability to really get people to invest. “In the past the 45 straight quarters of growth was made mainly on consumption and has been basically at the lower end, as a result poverty in the Philippines continued to increase,” he explained.

“The President’s goal is to reduce poverty which can only be done by accelerating growth, sustaining it and making sure we do the fundamental changes to keep it that way,” he added.

Purisima said the government will continue the conservative approach while working on the fundamentals “so that when the upturn in the global economy happens next year we will be able to capture more than our fair share.”

“Clearly we are very optimistic because not only are we focused on the right things but there are several trends going for the Philippines such as the continued growth of the outsourcing industry at 20 percent; the resilience of overseas Filipino workers’ remittances, the full integration of the semiconductor industry with the electronics industry of the Association of Southeast Asian Nations and good mineral prices,” Purisima said.

“If we focus on the foundations, building the supply chain, building the infrastructure and really making sure that the macroeconomic fundamentals remain benign and stable, we're confident of getting a growth in our gross domestic product by 7 percent in 2010,” he added.

Purisima said the Monetary Board has approved the peso bond swap because it will enable the country to stretch the maturities of its debt papers and allow it some breathing space.

“Hopefully it will also deepen the interest in the capital market for long term instruments like 25-year bonds,” he said

Purisima said the peso bond swap will open up the market to longer tenor instruments and make the 25-year notes more liquid. This in turn will be good for infrastructure proponents and individuals seeking long term funds in the future as more longer term loans will now be available to those in need of funds.

On how much can be raised from the peso bond swap, Purisima said “it really depends on the market. It is up to Treasurer Tan to execute it in a manner that is good for the country. If the pricing is favorable we will swap more but if not, then we will swap less peso bonds.” (PNA)

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