Manila thinks domestic liquidity adequate

Manila: The Philippine economy remains sound despite the global financial crisis and a steady inflow of dollars from overseas Filipino workers are helping keep domestic liquidity adequate, the central bank chief said on Monday.

The country's banks have limited exposure to the collapse of Lehman Brothers, a factor helping contain any large swings in domestic markets, said Amando Tetangco, the central bank governor.

"The country's macro fundamentals remain sound and the economy has proven to be resilient," Tetangco told a Senate hearing. "We have sufficient liquidity from other sources of foreign exchange."

Remittances from overseas workers, averaging more than $1 billion (Dh3.67 billion) a month, and dollar inflows from the foreign parent firms of outsourcing and call centre companies, were supporting the peso.

The peso is one of Asia's worst-performing currencies this year against the dollar, having dropped 12 per cent.

Bailout impact

The Korean won is down more than 20 per cent and the Indian rupee 16 per cent, while the Singapore dollar, Indonesian rupiah and Malaysian ringgit have fallen between 0.6 per cent and 4 per cent.

Tetangco expressed confidence that the planned US bailout would support financial markets.

Manila's fiscal position likewise remains manageable, providing more room for state spending to shield the economy from a global slowdown, said Dennis Arroyo, director for policy planning at the National Economic Development Authority. The Southeast Asian country recorded less than half of the expected annual budget deficit in the first eight months of this year.

"We still have headroom in case the storm worsens," Arroyo told the same Senate hearing.