Solid fundamentals buoyed Philippine economy despite Martial Law in Mindanao

MANILA—The economy has ample buffers to withstand adverse effects of the current unrest in Mindanao as traders favored the Philippines, the Department of Finance (DOF) said on Friday.

Finance Secretary Carlos Dominguez III said that the country’s solid macroeconomic fundamentals buoyed the local bourse and the peso despite President Duterte’s declaration of Martial Law in Mindanao.

On Thursday, the bellwether Philippine Stock Exchange index (PSEi) added 33.83 points or 0.42 percent to close at 7,871.65, while the peso ended stronger against the greenback at P49.83 from P49.995 in the previous day.

National Treasurer Rosalia De Leon said the Philippines’ ample buffer positioned the country to weather changes in global environment, noting the nation’s external debt-to-gross domestic product at 24.5 percent is one of the lowest in the region.

She also said that the country has a current account surplus since 2003, while its net foreign direct investments at USD7.933 billion in 2016, which is higher by 41 percent year-on-year.

The Philippines also has healthy level of international reserves at USD81.8 billion, equivalent to nine months of import cover.

Further, De Leon said the government’s fiscal position remained strong and is well managed with only 2.3 percent deficit-to-GDP as end-March this year, while its debt-to-GDP ratio stood at 41.9 percent.

“The government’s average maturities is over 10 years and we have declining vulnerability to foreign exchange shocks with only 34.2 percent share of FX debt to total,” De Leon said.

“We continue to increase our reliance to peso funding taking advantage of ample liquidity,” she added.