NG confident of RP retention in CalPERS portfolio

Government is confident the Philippines would get a favorable review when the California Public Employees Retirement System (CalPERS) evaluates its investment portfolio in January and decides whether to retain the country in its preferred list.

CalPERS, the biggest pension fund in the US, is expected to review its list of "permissible countries" in January based on the recommendation of third-party analysts which started taking their surveys this month.

According to the Investor Relations Office (IRO) of the Bangko Sentral ng Pilipinas (BSP), CalPERS’ analysts have already conducted their surveys, focusing on the fund’s usual concerns in good governance.

IRO executive director Rene Pizarro said the government is optimistic this year’s evaluation would not turn up problems that could threaten the country’s removal from the CalPERS list.

"We don’t think there will be problems this time around," Pizarro said. "Oxford Analytica, one of CalPERS’ consultants, has just concluded its survey and we have had no negative feedbacks so far."

The government’s optimism stemmed from the partial implementation of the value-added tax (VAT) reform which allowed the Arroyo administration some headroom in its fiscal balance this year.

By 2006, the government is expecting bigger revenues when it implements the final phase of the VAT reform, particularly the increase in the VAT rate from 10 percent to 12 percent.

After the controversy over its removal from the list of "permissive emerging equity markets" in 2003, the Philippines was reinstated in 2004 and placed on a one-year cure period before finally being fully reinstated this year.

Pizarro admitted that the period of political upheaval last July created tension among the country’s investors and creditors but he said this has largely dissipated since then.

"Our investors, specifically, were somewhat disconcerted when the Cabinet resigned en masse last July because they were particularly impressed with that economic team," Pizarro said.

Last July, majority of the Arroyo administration’s economic team resigned en masse, led by former Finance Secretary Cesar Purisima and Budget Secretary Emilia Boncodin.

Appointed in their stead were veteran banker and politician Margarito Teves as Finance Secretary while Socio economic Planning Secretary Romulo Neri was moved to the Budget Department.

"They might not be as impressed with this economic team but the performance will speak for itself," Pizarro said.

Despite the optimism over the increase in taxation, however, analysts have been pointing out that the other end of the government’s revenue reform agenda has so far been neglected, specifically the crackdown on prominent tax evaders.

The Finance Department has been adamant about making an example of prominent personalities found evading their tax payments but since Purisima’s resignation, the program has taken the back seat.

Last month, Finance Undersecretary Noel Bonoan finally resigned from the department, leaving behind the Run After Tax Evaders (RATE) program and the Revenue Integrity Protection Service (RIPS) which has been repeatedly praised by investors and creditors alike.