The DBCC had initially agreed to stick with its original 2004 macro-economic assumptions but the BSP said these numbers might no longer be reflective of the developing trends both in the local and international markets.
BSP Governor Rafael Buenaventura told reporters yesterday that the prospects in the country’s major trading partners, particularly US and Japan, are expected to improve beyond earlier expectations, forcing a change in the 2004 export prospects.
"Clearly the 2004 numbers are different now. We are in a very fluid situation," he said.
According to Buenaventura, the macroeconomic fundamentals in the US look different now than when the 2004 assumptions were first formulated, with employment going up and economic prospects generally better than before the US-Iraq war.
"There are also good numbers expected to come out of Japan and that could change the whole picture," Buenaventura said. "Our outlook would certainly change particularly for exports."
Buenaventura pointed out that the rising trade imbalance could be taken as indicative of what might be an improvement in domestic production since the importation of raw material and capital goods are increasing.
"That could further suggest an increase in the credit requirement of local manufacturing companies," he added.
An increase in domestic credit requirement, Buenaventura said, could indicate that the liquidity expected by the national government would not be present when it borrows its requirements from the domestic credit market.
Buenaventura said that if there were improvements in foreign direct investments, exports and remittances from overseas Filipino workers, then there would be less need for foreign exchange borrowing.
"Some people think we are borrowing too much," Buenaventura pointed out. "That’s not true. Its just that we are not generating enough foreign exchange to pay for our requirements. When that happens, our international reserves suffer and that puts pressure on the peso."
Buenaventura said that because of the constant shifting in these factors, the macro-economic assumptions should also be under constant review. "It’s far too early to see now where the ultimate numbers would be," he said.