MANILA, June 9, 2005
 (STAR) By Des Ferriols - As the Arroyo administration plunges into one political controversy after the other, foreign investors are beginning to feel the jitters that could ultimately set back government’s economic program following the success of its bid to increase taxes in 2006.

Finance officials said yesterday the government’s "preoccupation with politics" was a waste of energy better used for pursuing economic reforms that have not been completed.

Finance Secretary Cesar V. Purisima warned yesterday that the government’s economic agenda was far from complete, chiding Congress on several key legislations that have not been passed.

"Our collective energy is being zapped chasing ghosts when we should be focusing our energies on alleviating poverty," Purisima said.

According to Purisima, the country was being used as a "political football," effectively derailing the momentum towards economic reforms that has been achieved after the passage of the amended value-added tax (VAT) law.

"We need to pass key legislations including the amendments to the charter of the Bangko Sentral ng Pilipinas (BSP)," Purisima said. "We have to put more teeth on our competition laws, strengthen our financial system, empower our small and medium-scale sector, build infrastructure and streamline our processes."

A very irate Purisima told reporters that since the country did not live in a vacuum, the government should inspire confidence in the midst of heavy competition in the global market.

The Arroyo administration has been under renewed attack as opposition questioned its legitimacy and alleged massive cheating in the 2004 presidential elections.

While this might not surprise domestic investors who are more or less accustomed to political controversies, market sources said the same was not applicable to foreign investors.

Even with its intimate knowledge of Philippine politics, the local market was not immune to fresh rumors of attempts to destabilize the government with the stock market plunging nearly 50 points at yesterday’s trading at the Philippine Dealing System (PDS), the peso retreated by another 16 centavos to close at 54.670 to a dollar from 54.510 on Tuesday.

The controversy is also coming at a bad time with the Arroyo administration preparing an economic team to conduct a no-deal roadshow in Europe and the US where they hope to drum up interest for the country’s final borrowing foray into the foreign market this year.

According to an official of the Bangko Sentral ng Pilipinas (BSP), foreign investors were starting to get affected although the reaction was still largely tempered by the government’s improving fiscal position.

Overseas, investors are keeping an eye on the ongoing Senate investigation into the alleged involvement of politicians and police officials in jueteng operations as well as the controversy over alleged election rigging.

"If we are lucky, this would blow over soon and our investors will not lose sight of our progress," said the BSP official who declined to be named.

Reported by: Sol Jose Vanzi

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