New York City, 11 June 2012 – The Philippines’ economic leaders will hold a Non-Deal Roadshow (NDR) in key cities in the United States from June 11 to 15, on the heels of President Aquino’s state visit to Washington last week. Â Finance Secretary Cesar Purisima and Trade and Industry Secretary Gregory Domingo will meet with banks, credit rating agencies, and investor groups to provide an update of the Philippines’ fiscal and macroeconomic situation and milestones on the Aquino Administration’s governance reform agenda. The NDR will cover New York City, Boston, San Francisco and Los Angeles. The Philippine delegation also includes Treasurer Roberto Tan, Assistant Governor Cyd Amador of the Bangko Sentral ng Pilipinas (BSP) and Executive Director Claro Fernandez of the BSP’s Investor Relations Office (IRO).
“We will share the positive news that the Philippines’ fiscal and macroeconomic fundamentals continue to improve despite continued volatilities in the global economy,” Secretary Purisima said. The Philippines had a better-than-expected 6.4 percent growth in the first quarter, surpassing the official target of 5-6 percent and market consensus forecast of 4.8 percent. Â Key growth drivers were government expenditure, which was up 24.0 percent from the same quarter last year, as well as the services and industry sectors, which increased by 8.5 percent and 4.9 percent, respectively.
Fiscal consolidation efforts are also on track, with revenues up 11.4 percent for the first four months of the year. Revenue collections have grown faster than the GDP in the past five quarters, solely due to tax administration measures. The national government’s fiscal deficit in January to April was down to P2.9 billion or just 1.0 percent of the P279.1 billion program for 2012. The country’s foreign exchange reserves which stood at US$76.0 billion as of end-May 2012 also continue to provide a healthy buffer from external shocks, and are bolstered by sustained growth in dollar remittances and business process outsourcing revenues. In the first quarter, remittances grew by 5.4 percent to US$4.84 billion.
The unprecedented positive changes across the economic, financial and political landscape in the Philippines are gaining increasing recognition. Â Since the Aquino Administration assumed office in end-June 2010, the country has earned seven positive sovereign credit rating actions (four positive outlook and three rating upgrades) on account of sustained economic growth, strengthening external payments position, improving fiscal dynamics and implementation of governance reforms. The most recent of these rating actions was the May 29 decision of Moody’s to change the outlook on the Philippines’ Ba2 rating from stable to positive, citing expectations of continued fiscal and debt consolidation, and enhanced finance-ability of government debt.
Secretary Purisima said he will meet with credit rating agency officials in New York as part of a continuing dialogue. “The Philippines has had 53 consecutive quarters of economic growth. We are very happy to report to them that things are getting brighter for the Philippines, especially with third party and investors’ recognition.”
Secretary Domingo pointed out the critical role that good governance plays in sustaining the Philippines’ economic growth. Â He said “the positive trajectory of the Philippine economy will continue because it is supported by good governance, the centerpiece of President Aquino’s administration.” President Aquino’s agenda in his state visit to the United States included a discussion of the Philippine Government’s recent milestones in its good governance and anti-corruption reforms.
The Trade and Industry Secretary pointed to the recent 20 notch improvement in its standing as a business destination, particularly in terms of market access, ranking 72nd out of 132 countries on the World Economic Forum;s enabling trade index. He said “The Global Enabling Trade Report 2012″ reported that the Philippines climbed by 20 notches up the index from the previous 92nd spot in 2010, reflecting what was perceived as a reduction in trade barriers.
The NDR is supported by Citi, Goldman Sachs, JP Morgan and Morgan Stanley, who is also the lead coordinator for the roadshow.
William H. Strong, Co-CEO of Asia Pacific, Morgan Stanley, said, “At a time of global volatility, we view the Philippines as a bright spot. Investors and commentators have noted the ongoing structural reforms being implemented by President Aquino’s administration and the country’s economic growth, with Q1 2012 GDP at an impressive 6.4 percent. This is supported by Moody’s recent upgrade of the country’s sovereign credit rating outlook. In addition, as noted by one of our senior Emerging Market portfolio managers, the government can hit its medium-term 7.0-8.0 percent growth target as long as the reform momentum continues.”
The Philippines continues to undergo transformational change under the Aquino Administration as it embarked on a reform program anchored on good economic governance when it came into office in 30 June 2010. These solid steps are starting to bear fruit lifting the growth of the economy to a new trajectory. The strengthening economic fundamentals and the positive results that the country is getting from the good governance reforms being implemented have significantly improved the credit story and positions the country well for higher sovereign credit ratings moving forward and attainment of its socioeconomic development targets.
