Infra buildup pushes on despite challenges

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Dominguez

The Philippines will pursue its ambitious “Build, Build, Build” program despite the global headwinds now facing one of southeast Asia’s vibrant economies, according to Finance Secretary Carlos Dominguez III.

The headwinds include the sharply rising price of oil in the world market, which is among the factors pushing inflation higher, Dominguez said at a meeting arranged for him by executives at Standard Chartered Bank.

Dominguez also expressed concern over the escalating trade dispute between the United States and China, as well as the US Federal Reserve’s “aggressive” stance on monetary policy normalization through interest rate increases.

Dominguez also said the widening current account deficit was partly the result of the rise in importation of capital equipment.

He met with Standard Chartered Bank’s Karby Leggett, managing director for Asia and public sector head and Paul Skelton, head of global banking and institutional banking, at the sidelines of the annual meetings of the World Bank/International Monetary Fund of Governors here.

Dominguez told Leggett and Skelton at the meeting that despite these challenges to the Philippine economy, “the ‘Build, Build, Build’ program is doing very well,” with the Philippine government expanding its inventory of big-ticket assets that future administrations can later privatize to raise funds for their own priority programs.”

He cited as an example the New Bohol International Airport — located in the tourist island of Panglao in Central Visayas — which began implementation in 2015, but was only five percent complete by the time President Duterte assumed office a year later.

The original completion date for the airport was in 2021 but that the President moved the date to later this year: “We are building up our assets that some future governments, when they need the money, can opt to sell,” Dominguez said.

Leggett also said the country’s foreign exchange reserves and the pace of growth as measured by the gross domestic product, remain strong.

As for the trade deficit, he said this was understandable considering the massive need to import capital goods needed to power the country’s infrastructure modernization program.

Overall, Leggett said the long-term outlook for the Philippine economy is “extremely positive.”

Dominguez also said the widening current account deficit was partly the result of the rise in importation of capital equipment.

We are building up our assets that some future governments, when they need the money, can opt to sell.

With the New Bohol airport nearing completion, the Department of Finance and the Japan International Cooperation Agency signed last week a supplemental agreement extending a 4.376-billion yen loan to the Philippines to help fund the second phase of the project, which would cover the expansion of its runway and passenger terminal building.

In line with the “fast and sure” approach adopted by Manila and Tokyo in the pursuit of big-ticket infrastructure projects, Dominguez said the government acted swiftly in processing the necessary requirements for the supplemental loan, that, from the time the National Economic and Development Authority board approved it on 19 June 2018 up to the 8 October signing, took only a short period of four months to formalize.

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