Gloria sees swift recovery from impact of US crisis

BY JOCELYN MONTEMAYOR

PRESIDENT Arroyo yesterday acknowledged the impact of the global economic crisis on the country but said she expects the Philippines to recover in time for Christmas season.

Lehman Brothers Holdings Inc. filed for bankruptcy Monday, the same day another Wall Street giant, Merrill Lynch, was sold. The developments prompted central banks worldwide to mobilize to reassure financial markets.

Lehman’s collapse sent Philippine stocks plummeting 4.5 percent to a new 18-month low.

Arroyo, at the 56th anniversary celebration of Zamboanga del Sur in Pagadian City, said the country survives global problems because Filipinos are optimists and natural born fighters and because of her government’s tough choices that led to reforms in the tax system and attracted more investments.

These, she said, help "protect the people from high oil and food prices."

She said her government has also put in place programs which cushion the impact of rising prices of fuel and food, like finance and livelihood assistance for those in the transport, student and senior citizens sectors.

She said named the subsidies to poor families funded by extra earnings from the value-added tax.

During the visit, Arroyo distributed some P80 million in checks for infrastructure and agriculture programs, including P1 million each for the scholarship program for college students and financial aid to senior citizens in Zamboanga del Sur, and P10 million for the improvement of the OB-Gyn section of the Zamboanga del Sur Medical Center.

At the Philippine Midyear Economic Briefing at the Shangri-la Hotel in Makati City, Arroyo said Filipinos are like fighters who do not quit when they are knocked down.

She said her economic team focused its energy on managing inflationary pressures, providing safety nets to those who were hit hardest, and in delivering "the growth that will continue to generate jobs and the tough revenues that we need to fuel our investments in the future."

Arroyo said the depth of the financial market turbulence in the US require "strong, decisive and targeted actions internally."

These include continued focus on reigning in inflation, bringing down the prices of the most essential commodities, increasing targeted investments on the poor as well as strengthening the banking system to "improve our fiscal health, encourage investments in our most promising growth sectors and expand our potential sectors."

She said the country would also continue to strive for food self-sufficiency, for less energy dependence, and for greater self-reliance by "taking control of our destiny…(and) become even more globally competitive."

Senators called on government regulators to double check if there were government financial institution or even private Filipino businesses exposed to the collapse of investment house Lehman Brothers, saying knowing the extent of contagion would make it easy for government to launch a response.

State pension funds Government Service and Insurance System and Social Security System have denied having exposure to Lehman.

Sen. Francis Escudero, chair of the Senate ways and means committee, and Loren Legarda, economic affairs, said the government should not just take the word of the SSS and GSIS.

Reports said total private and government exposure to Lehman was at $33 million.

Legarda said the Insurance Commission should look into the government and financial institutions and even private companies to assess their susceptibility to Lehman’s collapse.

Legarda said the examples of Banco de Oro and Metrobank should be followed after the two banks immediately set aside funds to counter the effects.

Bayan Muna Rep. Teddy Casiño asked Malacañang to reevaluate its projections in the proposed P1.4 trillion 2009 national budget in the light of possible economic fallout from Lehman’s collapse.

"In the budget’s first hearing, our economic managers, particularly NEDA director general Ralph Recto, kept insisting that the rosy growth figures they used as a basis for the 2009 budget was valid given the second quarter upturn in the US economy. But with the latest meltdowns in Wall Street, that can’t be true anymore," he said.

Casiño said even the Asian Development Bank has predicted lower growth rates for the rest of the year, a trend that the lawmaker said is unlikely to change in 2009.

Makati City Rep. Teodoro Locsin said the troubles of the foreign lending institutions might actually present an opportunity for the government to improve its financial standing particularly if lending firms opt to liquidate their loan portfolios.

"If there is a fire sale, we can buy back our debt papers cheap," Locsin said. – With Dennis Gadil and Peter Tabingo