BUSINESS | MONEY

Wow, Philippines

Ben Ong

For Australian expatriates thinking of setting up shop in Manila – or bestowing investment money to relations back home – now could be an opportune time to do so. A leading economist translates the latest economic news on the Philippines into Taglish.

The Philippines again made international finance news when after more than 10 years, Moody’s Investors Service upgraded the country’s sovereign ratings two notches from Ba3 to Ba1 because of “progress in fiscal consolidation” and “macroeconomic stability, coupled with continued strength in the external payments position.”

Ooops! Ano ba itong pinagsasabi ko, tanong niyo? Pasensiya na po at there is no simpler way to break the good news. In plain language, the credit ratings agency is pleased with the government’s increased revenue collection and lower fiscal spending – eto ang “progress in fiscal consolidation”.  And, it recognised the strong growth momentum in the economy na tinutulungan ng mga remittances ng mga tulad natin na nasa ‘abroad’ – eto naman ang “continued strength in the external payments position”.

But you don’t need to learn these. The more important thing to know is that Moody’s upgrade translates into lower interest rate charges for Philippine government-issued debt.  Tingnan ninyo na lang, now Manila can borrow for five years at 1.7 per cent above comparative US Treasuries. The week before the upgrade, ang patong ay 3.7 per cent.  One month before, 8.0 per cent more than US Treasuries ang tongpats.

Konting matematiks po, mga kababayan. For ehemplo, if the US borrows money for five years, they’ll pay 1.6 per cent interest per annum today.  Ang patong sa Pinas 1.7 per cent na lang now, or 3.3 per cent (1.6 plus 1.7).  If the Philippines want to borrow 1 million for five years, it now has to pay interest of only 33,000 per annum.  Last month, the interest bill was 96,000 a year (1.6 plus 8.0) – a saving of 63,000 a year!

O, di ba magandang balita ’to?  This means that the Philippine government would be spending less on ‘bayad utang’ and more on projects that advance the economy’s growth prospects.

For us expatriates thinking of setting up shop in Manila – or bestowing investment money to our relations back home – this could be an opportune time to do so.

Not only because the Australian dollar can now buy more pesos – 46 pesos compared to only 41.50 pesos at start of 2010 – but also because of the better outlook for the Philippine economy in general.

Pinas is expected to grow by 5.1 per cent this year and 5.7 per cent in 2012.

Siguro, now the Philippines can live up to the saying that, “kahit ano itapon mo, tutubo”. To which I’d like to add, “huwag lang maunahan ng mga buwaya.”

But even here, the Aquino government’s efforts against corruption seem to be bearing fruit.

About the writer

Ben Ong is one of the most respected economists in Australia. He writes a daily economic column for Financial Standard. Prior to migrating to Australia, he worked as Head of Research at UnionBank of the Philippines.

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