MAY 7, 2009
(STAR) By Marianne V. Go - The Philippines may import up to two million metric tons of rice this year, based on a standby authority approved by the National Food Authority.

Agriculture Secretary Arthur C. Yap, said the standby authority does not mean that the Philippines will actually import that much. So far, he said the NFA has imported 1.5 million MT and its warehouses are all full.

An authority to import another 200,000 MT has been approved for use by the private sector.

However, Yap said, “we still have to see what the private sector will do.”

Thus, a remaining authority to import 300,000 MT remains on standby.

“I’ve learned my lesson from last year and refuse to comment on exactly how much we will import,” Yap said.

Last year, the Philippines imported 2.7 million MT following a rice price crisis that had several countries scrambling for rice.

The Philippines, being a major importer of rice, was blamed for causing a sharp spike in global rice prices.

Yap has assured that this year rice prices are expected to remain stable and will not experience wide swings as last year as the NFA has secured the bulk of its rice buffer stock for this year.

The 1.5 million metric tons of rice was secured from Vietnam at just below $500 per MT, almost 50 percent lower than the peak price the Philippines had to pay of $1,100/MT last year for its rice importations at the height of the global rice crisis.

The average price paid by the Philippines for its rice imports last year was just $750/million MT.

The 1.5 million MT was negotiated on a government-to-government basis and is scheduled to arrive on a staggered basis starting May, June, July and August.

The Philippines has an approved procurement budget for rice imports of up to 1.8 million MT.

Yap said the decision for further rice imports would be made by May  this year after the Department of Agriculture has the numbers on the main dry season palay harvest.

Fitch affirms credit ratings, 'stable' outlook for RP By Des Ferriols Updated May 07, 2009 12:00 AM

MANILA, Philippines – London-based Fitch Ratings affirmed yesterday all of its credit ratings as well as its “stable” outlook for the Philippines despite expectations that the country’s deficit would soar to P271 billion this year.

Fitch said the economy is likely to slow down dramatically to 0.1 percent this year because of the country’s plummeting exports and the expected 6.8-percent decline in remittances.

Despite these gloomy numbers, Fitch Ratings said it is maintaining its long-term foreign and local currency ‘issuer default’ ratings (IDRs) at ‘BB’ and ‘BB+’, respectively. The agency also affirmed the short-term IDR at ‘B’ and the ‘country ceiling’ at ‘BB+’.

Fitch said the Philippines has not been directly exposed to some of the most serious aspects of the international financial crisis, but it is not impervious to the deterioration in the global economy.

In response to the effects of the global recession on the economy, the government has initiated a P330-billion economic resiliency plan focused primarily on infrastructure investment and social spending.

Fitch said the main budget implications of the plan was the P160 billion in additional spending and P40-billion in tax cuts, with a 2009 deficit target of P229 billion.

But Fitch said the fiscal deficit is more likely to reach P271 billion, equivalent to 3.5 percent of the projected gross domestic product (GDP).

“The fall in tax revenue in the first quarter will be very difficult to make up in the remainder of the year as the economy slows,” said James McCormack, Head of Asia Sovereigns at Fitch.

McCormack said government revenue (excluding privatization) is down by four percent in the first quarter, marking the weakest first-quarter revenue outturn in 22 years.

“Fitch assumes there will be further fiscal policy adjustments as the year progresses, and the agency expects spending to be slightly below the current target by year-end,” McCormack said.

Nevertheless, McCormack said the forecast increase in the Philippine fiscal deficit in 2009 was in line with those of other ‘BB’-rated sovereigns, as is the deficit level itself.

In terms of government debt, however, Fitch said the Philippines compared unfavourably with its rating peers.

In 2008, McCormack said the National Government debt to GDP ratio was 56.3 percent, with the consolidated general government debt estimated at about 46 percent of GDP.

The ‘BB’ consolidated general government debt median was 30.6 percent.

“The debt-to-revenue ratio is even more telling, with the Philippines at 360 percent versus the peer median of 141 percent,” McCormack said. “Fitch has long considered the Philippines’ low government revenue base - among the lowest of all rated sovereigns - to be a fundamental rating weakness,” he added.

With a much weaker economy and elections due next year, McCormack said Fitch did not believe revenue enhancement would be a short-term policy priority.

“Consequently, if the expected increases in spending are not reversed once the economy begins to recover, or revenue collection is not stepped up considerably, there is a risk that Philippine government debt ratios may deviate further from the ‘BB’ medians, with possible negative rating implications,” Fitch said in the report.

McCormack said remittances had provided critical support to economic growth by supplementing household income and inflows were even more than enough to offset the $12.6-billion trade deficit, resulting in a $4.2-billion current account surplus.

Chief News Editor: Sol Jose Vanzi

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