MANILA, Philippines - Philippine economic managers were unfazed by the US federal government's partial shutdown on Tuesday.
Finance Secretary Cesar Purisima said it is "highly unfortunate for the rest of the world, as even countries like the Philippines are taken on a wild economic ride because of the political game of chicken in Washington."
"Fortunately for the Philippines, we enjoy a strong fiscal position, a structural current account surplus economy whose growth is led by consumption, and a young, educated population. This will allow the Philippines to ride out this situation better than other emerging markets - whose economic models are exports and extractives-based," he said.
However, the Finance chief expressed concern about the possibility of the US defaulting on its debt.
“What is more worrisome to the Philippines is if the US political stalemate cause America to default on its debt by failing to pass a measure on the debt ceiling. A US default, unimaginable for most of history yet now in the realm of the possible because of current political circumstances, can only lead to unprecedented chaos in the global financial markets," Purisima said.
At the same time, Bangko Sentral ng Pilipinas governor Amando Tetangco Jr. said the central bank will maintain a presence in the markets if the US government shutdown results in excessive volatility.
"We will continue to watch how the developments in the US will pan out. We will, as is our policy, maintain a presence in the markets if the domestic market reaction leads to excessive volatility," Tetangco said.
"The immediate impact would be on global and domestic financial market volatility, as investors may move away from risk assets to traditional safe haven assets," he added.
Tetangco said the Philippines' macroeconomic fundamentals would cushion any effects from market volatility.
"The domestic economy has sources of resilience owing to the buffers we have built," he said.
The U.S. government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to 1 million workers on unpaid leave, closing national parks and stalling medical research projects.
Federal agencies were directed to cut back services after lawmakers could not break a political stalemate that sparked new questions about the ability of a deeply divided Congress to perform its most basic functions.
After House Republicans floated a late offer to break the logjam, Senate Majority Leader Harry Reid rejected the idea, saying Democrats would not enter into formal negotiations on spending "with a gun to our head" in the form of government shutdowns. - With Reuters
source: www.abs-cbnnews.com
