Gov't defers roadshow; peso still weak

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Gov't defers roadshow; peso still weak
Posted: 1:28 AM | Jun. 16, 2005
Michelle V. Remo
Inquirer News Service

THE GOVERNMENT'S economic team has decided to postpone the international roadshow slated for this month, as the controversies hounding the Gloria Macapagal-Arroyo administration could taint the country's credit image.

National Treasurer Omar Cruz said the economic team intended to push through with the roadshow but had yet to decide on the date. Only the other day, the government said the roadshow would continue because foreign investors were expected "to see through the [political] noise."

The roadshow, which was originally set for one-and-a-half weeks starting June 21, was aimed at updating investors from Europe and the United States on the positive developments on the local fiscal front.

In particular, the economic team was hoping to inform foreign investors of the passage of key revenue-raising bills like the expanded value-added tax, and the implementation of administrative measures to improve the fiscal situation. Last April, the national government posted a budget surplus of P3.3 billion, the first time in four years.

But while investor confidence in the country was being boosted by progress on the fiscal situation, analysts said it had been slightly dragged by the current political uncertainty.

Controversies hounding the presidency have already caused the peso to tumble and the stock market to plummet. Yesterday, the peso closed at 55.28 to the dollar from 55.27 to the dollar Tuesday, on a trading volume of $371.5 million at the Philippine Dealing System.

Some critics of President Arroyo have called for her resignation amid allegations that she cheated in last year's election and that her family was involved in "jueteng," an illegal numbers game.

"What's happening in the political scene should really be a consideration in the postponement of the roadshow," said a bond trader at a leading commercial bank. "When everything tapers off, then there will be a better opportunity to sell the Philippines."

The trader said there was also a downside to postponing the roadshow. He said it would send the signal to foreign investors that the Philippines was unprepared to face the international market.

The economic team said politics was not the main reason for the postponement of the roadshow. Cruz said the decision was made after the economic team realized that there would be quite a number of bond floats in the international market in the next two weeks.

"It would be foolish on our part to go there and compete for the attention of foreign investors," Cruz told reporters. "We want to go there at a time when we will have an undivided attention of investors."

Cruz said Asian countries were expected to float $4.9 billion worth of bonds and European countries were expected to issue bonds worth 2.8 billion euros.

Finance Secretary Cesar Purisima explained that many countries were scrambling to float bonds in the next two weeks to beat the July 1 implementation of new disclosure requirements for issuers by the European Union.

"The potential new issue pipeline in Europe is expected to be crowded for the remainder of the month, but we expect a more receptive audience when the current potential issuer backlog has cleared," Purisima said in a statement.

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