Big Interviews, Capital Markets, Economics, Philippines, Politics - Wednesday, August 17, 2011 8:38 - 0 Comments

Purisima’s Philippine balancing act

Asiamoney, August 2011

Asiamoney meets Secretary of Finance Cesar Purisima in a booth in a Hanoi conference centre, promoting Manila’s role as the next host of the Asian Development Bank annual meeting. He is flanked by images of the rolling chocolate hills of Bohol, while a TV shows idyllic beaches. It’s an agreeable backdrop and, given the Aquino government’s push to boost tourism infrastructure, not wholly incongruous. But it’s in contrast to the more rugged challenges that Purisima faces in dealing with the Philippine national finances.

Foremost among them is the tension between two competing goals. On one hand, the country’s GDP deficit – 3.74% of GDP at the end of 2010 – takes valuable money out of the country and pours it down the black hole of interest payments; clearly that deficit has to come down. But on the other hand, there is a need for investment in almost all areas of the Philippine economy, so as to foster growth. Doing both seems a near-impossible trick, while oil and food inflation make matters harder still.

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