CENTRAL BANK HEAD SAYS PHILIPPINE GROWTH ON TARGET
The Philippines' first quarter growth
figures released yesterday indicated the government was likely
to achieve its 1987 targets, Central Bank governor Jose
Fernandez said in an interview.
    The National Economic Development Authority (NEDA)
announced yesterday gross domestic product (GDP) grew 5.78 pct
and gross national product (GNP) 5.53 pct in the first quarter
from a year earlier.
    "I don't see anything on the horizon that should cut it
(growth) short," Fernandez said.
     NEDA said GNP had grown 3.56 pct and GDP 3.25 pct in the
fourth quarter of 1986 from a year earlier. Last year's GNP
growth, put earlier at 0.13 pct, was revised to 1.51 pct.
    "Certainly I do not see any shortage in external resources
and if GNP growth continues at this level I would assume that
domestic resources on the fiscal side would be generated and
would not be a stumbling block," Fernandez said.
    "I think even before the figures came out, simply looking at
key indicators, such as consumption of fuel oil and power,
showed that the economy was on a different track from last
year," he said.
    Fernandez said consumption tended to be heavier in the
first and second quarters because of the dry weather, and it
could drop off in the third quarter.
    He said the most significant sign of recovery lay in the
manufacturing sector, which grew by 9.64 pct, after declines in
1985 and a slow turnaround in the second half of 1986.
    "That is not a seasonal thing, it is secular," he said.
    He said the government had met all monetary targets set for
the first quarter in consultation with the International
Monetary Fund (IMF). It expected to draw down the fourth
tranche from its 198 mln SDR stand-by arrangement soon.
    The Philippines has so far drawn three tranches totalling
58 mln SDRs from the arrangement expiring on April 23, 1988.
Fernandez said an IMF mission would visit here in July or
August to review performance in the January-June period.
    He said IMF repayments were projected to total 1.56 billion
dlrs over the 1987-92 period and drawings only 236 mln dlrs.
Repayments were inevitable and many countries would find their
net repayments to the IMF rising in the next few years.
    "It means that since there will be a net drain on ODA
(official development assistance) accounts the commercial
banking system will be requested to hold the line," he said.
    It is an internal constraint that exists because the IMF
debt cannot be rescheduled, Fernandez said.
    The Philippines rescheduled 10.3 billion dlrs of its 28
billion dlr foreign commercial debt in March.
    Fernandez said Central Bank bills, introduced in March 1984
to mop up excess liquidity, had peaked at 43.1 billion pesos in
April 1986. But their unwinding on maturity dates, started in
October last year, had almost been completed.
    He said auctions of treasury bills, whose outstanding level
touched 95.44 billion pesos on May 20, were going well.
"Treasury bills will remain a basic monetary tool," he said.
    Commenting on the country's foreign debt Fernandez said, "I
think the Philippine debt stock looms large because our own
receipts from exports have not taken the same kind of leap
forward as might have been suitable."
    The foreign debt is projected by the Central Bank to reach
29.04 billion dlrs by the end of 1987.
    NEDA said exports totalled 1.2 billion dlrs in the first
quarter, while imports were 1.4 billion dlrs.
    Fernandez said the government had targeted GNP growth of
between six and 6.5 pct this year. He cautioned that while
growth so far was high the targets had not yet been achieved.
    Fernandez said he saw no merit in arguments by some
economists that the peso, currently pegged at 20.50 to the
dollar, ought to be devalued to make the country's exports more
competitive.
    "By being pegged to the dollar on a basket basis the peso
has already substantially devalued against all of the country's
trading partners," he said.
    On the proposed Omnibus Investment Code, he said he was
opposed to a clause which would allow the unrestricted
repatriation abroad of investments made during the first two
years after the imposition of the Code.
    The imposition of the Code, scheduled for last January, has
been delayed by objections from some business groups.
    "I think any central bank, certainly this one after the
events of the past two or two and a half years, has to be
prudent. This is not the time to throw all caution to the winds
and I'm not about to do that," Fernandez said.
    "It would be ideal if we reach a point where movement of
capital and earnings can be free," he said.
    "We have had one year of reasonably good results. Certainly
we continue to have a fairly heavy drain on our external
availabilities simply by servicing our debts."
 REUTER
