P.6-T savings gap puzzles MB officials

By Jun Vallecera
Reporter

THE monetary authorities cannot account for a good portion of the country’s savings that are neither deposited in the banks nor hidden under Filipino beds, and should reasonably be suspected as stashed somewhere—most likely abroad.

Based on projected nominal output of P6.2 trillion this year, the missing funds could range from a low of P645 billion up to P694 billion.

This was derived from an observation by former Finance Secretary and current Monetary Board member Juanita Amatong that the country’s savings rate had been basically constant at more than 27 percent of local output or the gross domestic product the past three years, and yet its investment rate has fallen from 17 percent to just around 15 percent of GDP during the period.

“Where then (has) the rest of the investment (gone) if they were not invested? They (were) either put in banks as deposits or kept under our beds or sent abroad to be spent there or a combination of these,” Amatong said before a gathering of local government budget officers in Baguio City recently.

She said the country’s investments as percentage of GDP is low, and this meant the country was “not investing enough in infrastructure or other projects to raise our capital stock.”

According to Amatong, the national savings rate stood at 27.5 percent of GDP in 2004 but slightly higher at 27.8 percent of GDP the following year.

In that period, the country’s investment rate stood at 17.1 percent of GDP in 2004 but fell to just 15.7 percent of GDP in 2005—very low, considering the investment rate of 21 percent in 2001.

She said some of the money was likely with the banks that promptly lend them on to the Bangko Sentral ng Pilipinas under its reverse repurchase (RRP) facility, where they earn interest above seven percent.“But it could not be all there because there is only so much in RRPs,” Amatong noted.

She speculated that a good portion of the missing funds, hundreds of billions of pesos worth, could only have been brought abroad “either as deposits or as investments.”

Amatong refused to call the outflow of savings as capital flight, although as regulator she knows that with the currency deregulation in place corporate account holders and high-net-worth individuals could transfer funds from Manila to any bank in the world with a single stroke of a computer key.

Two years ago, Sen. Mar Roxas II called attention to this phenomenon at one gathering, lamenting that Filipinos themselves seem to have little faith here and have stashed a good part of their funds abroad.

He urged the government to craft ways to draw back even a portion of the amount.

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