MANILA, March 11, 2004
(STAR) By Des Ferriols - Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura has urged leading opposition presidential candidate Fernando Poe Jr. to explain his debt restructuring plan, warning that it may unsettle the financial markets.

Movie actor Poe, President Arroyo’s strongest challenger for the May 10 vote, released his platform of government on Tuesday, declaring that he would "look into the possibility of restructuring our sovereign debt in the domestic and international financial markets."

Buenaventura said it may be misconstrued by the market.

"Debt restructuring (treads) a fine line with debt repudiation. That is why there is a need to clarify," he said.

Credit rating agencies as well as foreign investors holding Philippine bonds also expressed alarm over Poe’s pronouncements.

According to the Investor Relations Office (IRO) of the BSP, the market is taking Poe’s comment seriously since he is seen as a strong contender in the May polls.

Government officials said yesterday Poe’s comments could have caused the peso to end weaker against the dollar on Tuesday, when the spread on the Philippines’ 10-year debt notes also widened by 19 basis points to between 480 and 492 basis points above US Treasury.

"If his (Poe) platform includes debt restructuring, it becomes a serious concern for people who are holding Philippine bonds," said IRO managing director Cora Guidote.

Though she refused to identify which of the credit rating agencies were especially concerned, sources said the UK-based Fitch Ratings was the first to react.

"It is understandable for them to react that way," Buenaventura said. "But I think Mr. Poe has sufficiently explained what he meant by the statement."

At a forum with convenors of the "First 100 Days Agenda" last Tuesday, Poe clarified his position saying that the new government must "sit down with creditors" to arrive at a "mutually beneficial solution" to the problem of the country’s burgeoning debt.

"I wish to make it clear that government must honor its commitment to creditors, and it must not only work to stretch debt maturities but also try to bring debt levels down," he said.

His spokesman, Rep. Francis Escudero, also said that Poe’s call for debt restructuring should not be equated with debt repudiation or debt moratorium.

"Even his proposal for debt restructuring will not be a unilateral act on the part of the government. It will be done with the full consent and cooperation of our creditors," Escudero said.

The Philippine foreign debt stands at more than $56 billion.

Escudero claimed that total public sector debt has risen to $68 billion (P3.826 trillion) under the Arroyo administration.

Regardless of who wins the election, however, Guidote assured that the BSP’s position would remain the same: honor all commitments and obligations.

"We will give the same advice to any president," she said.

Buenaventura has warned political candidates against spawning confusion with comments about debt restructuring.

"From my perspective, what is really more important for the incoming administration, whoever wins, is that they address the budget deficit in order for our debt to be sustainable," he said.

Guidote explained that the market was being sensitive at the moment as the government is planning a 10-year global bond issue of between $500 million and $1 billion. Finance Secretary Juanita Amatong said proceeds will fund part of this year’s P197.8 billion ($3.5 billion) programmed budget deficit and support the cash-strapped National Power Corp.

"If the investors have to face the possibility that our debt will be restructured in the near term, it will affect not just the price but the intention of the market to invest at all.

Credit rating agency Standard and Poor’s gave the global bond issue a credit rating of "BB" or below investment grade.

Buenaventura said that the bond exchange already facilitates a form of restructuring by exchanging near-term maturing obligations with longer-term maturities.

Poe’s platform also offered an anti-globalization platform, which pledge to "re-orient the government’s policy on globalization to focus on pushing for expanded markets for our products and protecting vulnerable sectors from unfair competition."

In a statement, President Arroyo downplayed Poe’s platform, saying "many of the ideas are already being implemented."

She insisted that she still has the best platform of government to meet the need for changes desired by ordinary Filipinos.

Similarly unimpressed by Poe’s platform, Lakas-CMD solons urged the actor to present his plans and programs to the media to prove that it’s really his and that he fully understood its implications.

Bulacan Rep. Willie Villarama, vice chairman of the House committee on trade and industry, charged that it is crafted by recycled advisers of former President Joseph Estrada.

Meanwhile, Cebu Rep. Antonio Cuenco echoed the President’s view that Poe has nothing new to offer in his six-point program such as his promises on land reform, drastic cost-cutting measures in government, improved tax collection, fight against terrorism and economic diplomacy, among others, as they are already in place.

"But I welcome any new ideas," Mrs. Arroyo said. "The important element in any campaign is the enrichment of ideas that will work towards the betterment of the average Filipino."

Mrs. Arroyo, her vice presidential running mate Sen. Noli de Castro and the 12 senatorial candidates are set to return to the campaign trail today in Laguna where they first launched their campaign last Feb. 9.

"Each candidate must have a defining issue and ours is the fight for change," Mrs. Arroyo said.

"The pace of our campaign itself shows clearly how impatient we are, and how impatient the people are, for change," she stressed. "We are bringing the message of change to the farthest regions of the country and the people are responding with warmth and enthusiasm." — With Marichu Villanueva, AFP

Reported by: Sol Jose Vanzi

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