Palace: RP far from becoming another Argentina

The government’s economic managers gave assurances yesterday that the Philippines is far from going the way of Argentina, which suffered an economic collapse in 2001.

The assurances were given by two Cabinet members despite the fact that oil prices continue to rise and the expanded value-added tax (EVAT) law may be implemented soon.

Finance Secretary Margarito Teves and Trade Secretary Peter Favila said that what happened in Argentina was total economic collapse due to various causes and not just because of surging oil prices and budget deficit.

"That will take a long explanation because what happened in Argentina was a combination of fiscal, economic and foreign exchange (problems)," Teves said.

"What we have now is just the fiscal crisis but we will be able to reduce our deficit, especially if the Supreme Court will lift the temporary restraining order on the EVAT and the agencies improve their collections within the next five or six months," he said.

Teves also explained that government expenditures remain within budget and he is optimistic that targets would be achieved.

"We have to do our share in saving energy to save our foreign exchange reserves," Teves said, saying that for every $3 increase in oil prices, we lose $1.26 billion in foreign exchange reserves.

Various energy conservation measures would also help the country and the people cope with surging oil prices and new taxes.

Favila added that Argentina was hit by capital flight and runaway inflation during its crisis, a scenario that would most likely not happen in the Philippines.

"The stock exchange is very positive, the index is good and we have a single-digit and very well managed indicator of inflation," Favila said. — Aurea Calica