“A llama breaking into a trot” — this is how David Pilling, financial analyst and columnist of Financial Times, sees the Philippines after the country has lately emerged from the debt mire it has wallowed in for decades to become a lending or creditor nation.
After years of being Southeast Asia’s economic laggard or “llama,” the Philippines has lately showed signs of “pulling its act together” and “turning a corner.”
Financial Times is an international business newspaper published in London and printed in 24 cities around the world and is being read by 2.1 million readers worldwide.
David Pilling is the newspaper’s Asia editor.
Pilling gave three reasons for the upbeat appraisal on the country’s economic prospects.
The first is a dramatically improved external debt situation. After years of indebtedness, the Philippines is now a net creditor due mainly from the dollar remittances of about eight million overseas Filipino workers which have grown in five years from $7.5 billion to 20 billion. The P80 billion foreign exchange reserves the country has accumulated is higher than the external debt.
Second, at the home front, the country’s budget deficit has narrowed from 5-6 per cent a decade ago to a manageable 2 percent. The country has gotten its fiscal house in order by widening the tax net, keeping spending in check, and scrapping fuel and power subsidies.
The third reason has to do with a vastly improved political situation. The government of Benigno Aquino “has sent out a strong message it will not tolerate corruption.” Tax officials have seriously gone after evaders, including big ones.
Piling’s report cites other recent developments in the country that augur well for an economic upturn.
These include the Supreme Court ruling, handed down this week, to redistribute Hacienda Luisita, owned by President Aquino’s family, among tenant farmers. “The fact that a sitting president can be stripped of land is a hopeful sign that the separation of powers enshrined in the constitution is being honoured.”
Likewise cited are public-private partnerships in building roads, railways and power stations, increasing rice self-sufficiency, a stabilizing legal regime, and a booming stock market which ranked as the world’s seventh best last year.
“Many economists are predicting a private investment boom, predicated on favourable demographics – half of Filipinos are under 25 – and the healthiest banking system in south-east Asia,.” Pilling continues.
Pilling concludes: “The Philippines may still be the llama of southeast Asia. But for the moment, at least, the llama has broken into a trot.”