Third Reflection Paper

More borrowings, weak peso swell govt debt

MANILA TIMES: THE national government’s debt stock surged in January because of more borrowings and a weaker peso.

Data from the Bureau of Treasury showed that the government’s debt stood at P4.741 trillion, or P23 billion more than the end-December level.

Based on the Philippines’ population estimate of 94 million, the country’s debt would translate to each Filipino owing the country’s creditors some P50, 427.

Of the total outstanding debt, 44 percent is owed to foreign creditors while 56 percent is due domestic creditors.

The Treasury said the foreign component of the debt increased by P66 billion from the end-December level because of P55-billion in net availment and the P11 billion impact of the peso’s depreciation against the dollar.

The government also sold the equivalent of $1.25-billion worth of global peso notes in January.

The domestic component of the debt fell by 43 percent from the end-December level because of the net redemption by the sovereign of outstanding Treasury papers.

The government paid more due and demandable debt than the amount of Treasury bills and bonds issued during the period.

The government’s contingent debt—comprised mainly of guarantees it issued —was unchanged from the previous month’s P550 billion.

The government earlier said the debt stock would breach the P5-trillion mark by the end of the year as it intends to borrow on behalf of government-owned and -controlled corporations.

Last month, the government tapped the global financial markets for the second time when it floated $1.5-billion worth of 15-year dollar-denominated IOUs to lengthen the country’s debt profile and reduce interest costs.

The projected P5.135-trillion outstanding debt by year-end would be equivalent to 55 percent of the country’s economic output as measured by its gross domestic product (GDP).

Last year, the country’s debt-to-GDP ratio stood at 55.4 percent, down from the previous year’s 57.3 percent.

The country’s economic managers aim to reduce this ratio to 43 percent by the end of the Aquino administration’s term in 2016.

The government relies heavily on foreign and domestic borrowing to plug its budget deficit, which is programmed to hit P300 billion this year.  By Katrina Mennen A. Valdez

http://www.manilatimes.net/business/more-borrowings-weak-peso-swell-govt-debt/

Reaction:

     It is very painful to think that our country, Philippines, will borrow again some money from the global financial markets.  Because of this, questions seeking for clarifications about this issue filled my mind. First of all, is it really a necessity?  Second, can't the government cut the pork barrel of our senators and congressmen to utilize them for the poor people and to save the Philippines from extremely large debts?  Third, is the money sent by the OFWs and all the Filipino people living in the various corners of the world not enough that the government should borrow again? How about our taxes? And, lastly, the most painful thing to hear, is it really "DEBT" that keeps the Philippines alive as a country?

    In my own opinion, this debt causes a large destruction to our economy.  Filipino people have carried enough burden caused by the increase in price of goods and services. Causing another burden which owes each of us P50, 427 to the country's creditors is very heavy. If you will ask me about this, I can't imagine myself paying that amount of money. I'm pretty sure that all of us have a hard time thinking of paying that kind of debt especially to those poor people. I am aware that Filipino citizens are screaming at the top of their lungs to the government asking for their accurate guidance and service.

   Accurate guidance and service means a strict proper collection of taxes without favoritism, honest government officials that would not engage to corruption, and proper utilization of our natural resources. As we all know, Philippines is very rich in natural resources. Because of this, why not use them? I hope the government can hear our views and opinions. There should be a concrete and clear conversation between the government and the citizens regarding this serious issue.

Second Reflection Paper ^_^

Gas, diesel prices expected to climb again this week 

by Alena Mae S. Flores

OIL companies are expected to raise pump prices by 50 to 70 centavos a liter this week following the continuing increase in world crude prices, industry sources said over the weekend.

“Our computations show that [the increase] will be around 50 centavos to 70 centavos per liter,” one of the sources said.

Energy Undersecretary Jay Layug said oil prices would go up again this week but could not say by how much.

“It will still likely go up, but we don’t see another spike like the previous week,” Layug said.

Dubai crude went up to $116 a barrel on April 14 from $111 to $115 the previous week.

Imported unleaded gasoline fetched $129 a barrel from $124 to $128 a week ago. Diesel went up to $140 a barrel on Thursday from $130 to $137.

The oil firms have already raised prices by P1.50 a liter since April 12.

Diesel is now being sold at P46.45 to P49 a liter, and gasoline at P53.60 to P60.81.

Gasoline prices have increased by P7.85 a liter, and diesel by P9.60, since the start of the year.

Layug said the government was prepared to take over Shell’s compressed natural gas stations in Biñan, Laguna, and Tabangao in Batangas to ensure efficient fuel distribution to transport operators.

Shell agreed to put up the stations in 2008 using the output from the Malampaya gas field, but the Laguna station has been beset by technical problems.

“I don’t think the stations are income-generating for Shell. They are not earning from them,” Layug said.

He said the government could switch technologies and rely on imported liquefied natural gas to fuel public transport buses rather than use natural gas from Malampaya.

The government aims to bring the number of public transport buses running on compressed natural gas to 1,000 from only 61 now. Of the 61, only 35 actually run on compressed natural gas because the fuel is not readily available.

PNOC Exploration Corp. had earlier set aside P400 million over the next two years to build more natural gas stations. A new station in Batangas is expected to begin operations in October to serve the buses plying the Batangas-Edsa route.

The state-owned company also plans to build a gas station at the Mall of Asia in Pasay City to bring the fuel closer to Metro Manila bus operators.

On Friday, the government said it would begin stockpiling fuel to build up its emergency reserves as unrest continued in the oil-producing Middle East and North Africa

President Benigno Aquino III said the first shipment of about 50 million liters pf diesel for the state-run Philippine National Oil Co. was due to arrive in May.

http://www.newsflash.org/beframe.htm

Reaction:

     I can really relate to this article. Me and my family are currently experiencing the burden of the rise in oil prices. Because of this, whenever I decide to go home in our province which is very far from Davao, my parents contact some of their friends or some of our relatives in the city to know if they will be going to the province using their private vehicles. If they will go, I should go with them so that I can avoid from paying the expensive fare in riding the bus. But if this cannot happen because of some circumstances, I should ride the bus with my student identification car to avail the discounted fare.  In addition, this crisis makes my family visit me less often than before. Somehow, this situation can be very depressing in my part because I am not really used to stay in the city without them. Another bad thing it brings me is that my allowance is decreasing in amount. Even though I experience all of these, I am still considerate in understanding that our economy nowadays is in the verge of crisis that affects many people including me and my family.

      Surely, I witness very well the sufferings of the people especially those poor and jobless ones in their financial problems caused by this crisis. On my opinion, political convulsions in the Middle East and North Africa are disrupting economies in the Middle East and have contributed to an astounding increase in the price of crude oil. As we all know, Middle East is well known for its fuel in the world market. Because of its economic fallout, it greatly affects the supply of fuel leading for the oil companies to rise their oil prices.

       Based on the article informing us about the project of the government to resolve this problem, I think that what they are planning is a wise solution. But somehow, I could not stop myself to wonder if they really can pursue this project successfully. Even if there is a little doubt in my mind, I hope they can. If they bring this project effectively, it will give a huge relief to the Filipinos. This can also gain the people’s trust to the government.  My little advice  to the government and to the President: "Do your best on this to serve the people."

First Reaction Paper

Philippines seeks large investments from China

Cesar Purisima, the finance secretary of Philippines, said that his country is seeking Chinese investments in finance, transport, facilities and other public projects since the country would like to change its economic growth from consumption into investment on April 12 in Beijing, China's capital.

His remarks came during a meeting of a Philippine delegation with representatives from the Chinese business sector, and he introduced investment opportunities in the country to Chinese enterprises.

It is the first senior delegation from the Philippines since the hostage crisis happened last August. However, the hostage crisis is not the key topic of the Philippine delegation's trip but rather attracting investment.

According to the delegation, Philippine GDP growth in last year reached 7.3 percent and was the highest recorded in recent years. The two-way trade volume between China and the Philippines hit 27.75 billion U.S. dollars last year. 

Purisima encouraged Chinese businesses to invest in renewable energy and infrastructure building in the Philippines when meeting with Chinese businessmen.

Philippine Trade and Industry Secretary Gregory Domingo, member of the delegation, echoed this sentiment, saying qualified Chinese investors can enjoy policies such as tax exemptions.

Public works and highways minister Rogelio Singson, also one member of the government delegation visiting China, said Manila was drumming up investment for 25 projects, with 10 to be offered to foreign investors this year.

The government will seek funding for another 48 projects in the coming years.

"We are really falling behind in infrastructure investment," Singson said.

When answering the question of how much money does Philippines want to attract from China, the delegation responded "not sure but tremendous."

Purisima also said: "We are bullish. We are open for business."

By Wang Hanlu, People's Daily Online

http://english.peopledaily.com.cn/90001/98649/7349713.html

Reaction:

  As we all know, trading and negotiating businesses with other countries is very essential for the economic growth of one’s country. Philippines, a country aiming for this economic growth, seeks large investments from China to change its economic growth from consumption into investment. Even if there are some issues distracting their relationship as neighboring countries like the hostage crisis causing the death of some Chinese people in the Philippines and the death penalty of the Filipino OFWs because of drug trafficking in China, it seems that they still maintain their business relations for the improvement of their economic status.

    On my own opinion, this action done by the Philippines is a good professional way that it sets aside some personal matters just to do what it believes that can improve the country’s economy. As we can see, Chinese products are very popular in Filipino markets. We already knew that China has a good stable economy and strong business relations from other countries and because of this, I think, Philippines decided to attract good investment opportunities to China. Imagine, Philippine Trade and Industry Secretary Gregory Domingo said that qualified Chinese investors can enjoy polices such as tax exemptions just to make sure that they would agree to give their investments. 

     Knowing this, I describe Philippines as a dependent country. It is a dependent country as such that its economic and political matters are linked to some countries especially those progressive countries like United States and China. It is not a bad idea, though, because asking some aid can bring large benefits. As what the saying goes, “No man is an island. “

    Therefore, I believe that what Cesar Purisima, the Finance Secretary of the Philippines did is a right thing for our economy. I like his statement which says “We are bullish. We are open for business.”  He is just favoring economic prospects. I think, this agreement can benefit both parties. I hope that China would agree to give their large investments and that through this, Philippines can gain economic improvements for the welfare of the Filipino people.