Election results point to policy continuity for Philippines — S&P

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THE Philippines is expected to enjoy a degree of policy continuity after administration allies confirmed broad support for the government, which is expected to help the country weather external risks, S&P Global Ratings said.

“Elections in Indonesia and India returned incumbents to power while the Philippines ballot appeared to have cemented support for the current administration,” S&P said in its Credit Conditions Asia-Pacific: Return of Uncertainty report released Thursday.

“We expect these results to lead to continuity in the policy environments in these countries,” S&P added.

S&P revised its growth forecast for the Philippines this year to 6.1% from 6.3% in the face of subdued state spending after a four-month delay in passing the P3.662-trillion national budget and the stronger-than-expected impact of the China-US trade dispute on the electronics sector, the country’s biggest exporter.

GDP was 6.2% in 2018, the slowest in four years and missing the 6.5-6.9% government target band. It fell to 5.6% pace in the first quarter, also the slowest in four years and below the 6-7% target range for 2019.

“US-China friction has intensified and signs are emerging that resulting policy uncertainty is weighing on capital expenditure (capex) and growth in China and across Asia-Pacific. As expectations build that major central banks may ease, some policymakers in the region have loosened policies,” S&P said.

The Bangko Sentral ng Pilipinas (BSP) reduced its policy rates on May 9 by 25 basis points (bp), and cut the bank reserve requirement ratio (RRR) by 200 bps to 16% from 18%.

“Policy responses and external support will continue to support international investor confidence by those sovereigns more sensitive to global capital flows,” S&P said.

“In some cases, we expect IMF (International Monetary Fund) programs to underpin the policy settings where sovereigns have agreed to receive support from the institution,” S&P added.

Separately, the Department of Finance (DoF) said in a statement Thursday that economic managers must step up their talks with the legislature to head off the possibility of a veto for key economic bills.

“These vetoes do not mean that we do not support you. The President’s vetoes invite us to take another approach,” Finance Secretary Carlos G. Dominguez III was quoted as saying in the statement.

“I propose that the economic team and Congress engage more frequently so that we can mutually move forward with legislation that truly contributes to the common good. In this direction, the DoF is already reorganizing to assign more full-time directors and staff to engage with Congress on a weekly basis,” Mr. Dominguez added. — Reicelene Joy N. Ignacio