RP placed too much importance on CalPERS, say economic officials

Senior economic officials had admitted that the Arroyo administration may have been giving too much importance to the California Public Employees Retirement System (CalPERS), the largest public fund in the US.

According to a top official, former Finance Secretary Jose Isidro Camacho had given much significance to CalPERS which has long since disengaged itself not only from the Philippines but much of Southeast Asia.

The official who declined to be identified said that although CalPERS’ investment decision and evaluation of the country’s outlook was important as a perception-setting move, it was made up to look critical only because of the government’s aggressive lobbying.

After almost a year of meetings and presentations, CalPERS ended up dropping the Philippines from its list of investment-grade countries, tossing away every attempt to dissuade the fund from marking the country as unacceptable.

Thus far, the Department of Finance has been mum on what it intended to do after CalPERS’ decision but the Bangko Sentral ng Pilipinas (BSP) appeared more pragmatic.

BSP Governor Rafael Buenaventura said that CalPERS’ concerns were valid but these issues were not those that could be solved overnight.

"They raised issues like getting off the blacklist of the Financial Action Task Force," Buenaventura said. "This is not something we can do within a year. It’s a long process."

"They were also concerned about our judicial system, peace and order and the like," Buena-ventura said. "If that’s the case then there is little we can do along the lines of instant solutions."

Buenaventura, however, declined to say whether he agreed that the government gave CalPERS too much importance.

The Philippines has been in CalPERS’ so-called "cure list" and has been lobbying to be reinstated in its actual investment portfolio after the CalPERS board decided on the country’s removal based on the recommendations of its consultant, Wilshire & Associates.

But Wilshire had also been sharply criticized for giving the Philippines a poor rating based on outdated and even wrong information provided by unverified third-party sources.

CalPERS is the biggest investment fund in the US. Although its Philippine investments have never been significant compared to other funds, it’s rating and evaluation are widely used by other investment funds when deciding whether to invest or not in a particular country.