PIA Dispatch - Friday, February 13, 2009

Moody's affirms the Philippines' positive rating outlook

Singapore (PNA) -- Moody's Investors Service has affirmed the positive outlook on the Philippines' B1 foreign and local currency government ratings and the Ba3 country ceiling for foreign currency bonds and B1 country ceiling for foreign currency bank deposits.

Moody's had in late-January 2008 change the rating outlook to positive from stable.

The rating agency notes that the Philippines has so far demonstrated a remarkable degree of resiliency to the global financial and economic crises, and has largely preserved gains achieved in recent years in improving the country's economic, external payments and fiscal fundamentals.

"The Philippines' balance of payments and banking system have held up well to the global inflationary and credit market shocks of 2008, thereby placing the country's external payments in a strengthened position to cope with the stresses likely to be encountered in 2009," says Tom Byrne, a Moody's Senior Vice-President. The improving trend in external debt service capacity will pause but it may not deteriorate.

"This situation, together with the current steady deceleration of inflation towards the Central Bank's 2.5-4.5 percent formal targeting range in 2009, should help ease pressure on the exchange rate this year and provide the Central Bank with additional scope to relax policy to cushion the effects of the global recession," says Byrne.

Moody's considers that a stable peso is crucial for containing budgetary debt service payments ”more than 50 percent of public sector debt is denominated in foreign currencies” and so allow for budgetary resources to be channeled into infrastructure programs and fiscal stimulus measures.

Furthermore, Moody's considers that the government's intention to increase the national government deficit only moderately in 2009, rather than adhering to its stated aim of balancing the budget this year, would not necessarily permanently reverse the improving trend in the government's debt metrics. The Philippine's public sector debt overhang remains greater than most its rating peers.

"Moody's believes that the country's long-term fiscal outlook would improve with more progress in shoring up government revenues, both through tightened administration and new tax measures, several of which are now pending before Congress," says Byrne.

"In addition, while expenditure control has improved in recent years and Treasury debt management has been skillful, these alone will not ensure fiscal sustainability."

"For the rating to move up, Moody's will assess the prospects for the continued resiliency of the country's balance of payments and the government's ability to limit revenue slippage. In this context, a key concern will be how overseas workers remittances hold up. These have grown by double digits since 2002 and amounted to $ 15 billion in the first 11 months of 2008, or about 20 percent of current account receipts and equal to 10 percent of GDP, but may decline in 2009.

“The extremely volatile global economic conditions present challenges to having a forward looking rating that attempts to see through the crisis. Nonetheless, in the immediate three to six months ahead it should become more evident whether the improvement in the Philippines' credit fundamentals can be preserved," says Byrne.

The principal methodology used in rating the government of the Philippines is Moody's Sovereign Bond Methodology, which can be found at www.moodys.com in the Credit Policy and Methodologies directory, in the Ratings Methodologies subdirectory.

Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy and Methodologies directory on Moody's website.


PGMA’s new paradigm for peace in Mindanao successful in North Cotabato

KIDAPAWAN CITY -President Gloria Macapagal-Arroyo’s new paradigm for peace in Mindanao, specifically the conduct of authentic dialogues with the communities is working well in the province of North Cotabato.

North Cotabato Gov. Jesus Sacdalan reported to the President at today’s dialogue with the peace stakeholders in the province that the local government units in the province have implemented their own local peace initiatives in support of the President’s goal of ending the decades-old conflict in Mindanao and finally achieve a long –lasting peace in Mindanao.

Sacdalan said the 17 towns and one component city that comprise the province, through the mayors, have conducted dialogues with the New People’s Army (NPA) and the Moro Islamic Liberation Front (MILF), including their relatives in their areas of responsibility.

Sacdalan also said that educating the children also helped a lot in discouraging them to join the rebel groups.

“Our efforts are working well. Insurgents and secessionist groups have refrained from attacking our towns,” he said.

The governor also said that the local government units have implemented development and livelihood programs/projects, as he stressed that indeed, the root causes of conflict is poverty.

The province, according to Sacdalan, needs more CAFGUs to help sustain peace as well as more physical and human infrastructure, most urgent of which are the bridges and roads damaged by the recent floods in the province.

Presidential Adviser on the Peace Process Retired General Avelino Razon said the LGUS concerns were immediately addressed by the President, among which are the damaged infrastructure in the province to be immediately repaired and the settlement of land conflicts especially in conflict areas.

Razon said upon instructions of the President, the Task Force on Land Disputes that included the Departments of Environment and Natural Resources, Agriculture and Agrarian Reform and, the National Commission on Indigenous Peoples , have met to come up with appropriate measures to specifically address this concern.

At the same time, Razon said the military and the police will continue to stabilize the situation in these conflict areas.

Razon said the conduct of dialogues with the peace stakeholders will be a continuing effort of the government.

The President arrived here this morning to led in the consultations with the peace stakeholders North Cotabato.

This is in line with her commitment to advance the peace process in Mindanao this year to finally put an end to the decades-old conflict in Southern Philippines and bring about progress and prosperity.

The President’s new paradigm for peace includes an interfaith dialogue, authentic consultations with the communities, and the principles of disarmament, demobilization, and reintegration for armed rebel groups.

The President has said that when hard power has not proven its value in achieving peace, the new model for dealing with the flashpoint areas in Mindanao has focused on a new combination of soft and hard power to promote peace.

Thus, she said there must be confidence-building measures grounded on strong interfaith dialogue and cultural awareness, investments, and basic infrastructure development.

Last Jan. 28, the President also led the peace dialogue with the stakeholders in Koronadal City.


Newly-completed Davao port expansion project provides better life to Davao folk

DAVAO CITY - Life for 32-year-old porter Jeffrey Sanchez, his wife and their four young children is getting better with the completion of the Davao port expansion project last December.

Sanchez told this to President Gloria Macapagal-Arroyo during their informal interaction this afternoon at the Davao Port in Barangay Sasa, located some 10 kilometers from the city proper here.

“Maraming salamat po mahal na Presidente sa expansion project. Nakatulong poi to upang lumaki ang kita naming dito,” he said.

The President inaugurated this afternoon the P420-million Davao Port Expansion Project, one of her key priority projects in Mindanao, to arrest congestion and accommodate larger export and import-oriented vessels at the Sasa wharf here.

The port of Davao, situated on the southeastern coast of Mindanao, is the premier export and import hub in Mindanao and ranks fourth nationwide in terms of container cargo traffic and container volume performance particularly for passengers and Davao fruits being exported to Hong Kong, China, Singapore, Australia, Europe, the Middle East and the United States.

Earning P360 from his previous four-shift work week, Sanchez said he is now able to work five times a week earning him an additional P1,500 per month.

Working more than 13 years at the port, Sanchez said he is hoping that more vessels would dock with the expansion of the port's berthing area.

Also, Friday the 13th is a lucky day for Barangay Sasa Chairman Mario Reta who also thanked the President for the port expansion project.

"Aside from opening more jobs, we are very happy of the expansion as we are promoting Barangay Sasa as the gateway of Davao City because we have the airport and seaport here," Reta said.

Aside from jobs, Reta said the port expansion project would certainly promote investments and tourism.

Reta said the proposed P870-million passenger terminal of the Philippine Ports Authority (PPA) would also complement their plan to put up a two-storey market right outside the Davao port premises.

In 1939, Reta's grandfather donated five hectares of land for the Davao port which now houses the offices of the PPA, Bureau of Customs (BOC), Coast Guard and stevedoring services.

The President later informed mediamen that she will be back next week to bring in Chinese investors who are keen in putting up business in livestock and aquaculture.


Presidential adviser on the peace process optimistic GRP-MILF peace talks to resume very soon

KIDAPAWAN CITY - Presidential Adviser on the Peace Process Retired General Avelino Razon expressed optimism that the stalled peace negotiation between the government and the Moro Islamic Liberation Front (MILF) will resume “very soon.”

Razon accompanied President Gloria Macapagal-Arroyo to her visit to this City today to lead in the dialogue with the peace stakeholders in North Cotabato.

“I am very optimistic the two panels will resume negotiations very soon as this is the President’s aspiration,” Razon said.

He said that the government panel chaired by Foreign Affairs Undersecretary Rafael Seguis is ready to sit down with the MILF and is only waiting for the response of the MILF leadership.

Razon said Seguis flew to Malaysia to request Malaysia, a facilitator on the peace talks, to inform the MILF leadership of the government panel’s “desire to sit down again on the negotiating table.”

Peace negotiation was stalled last August 18 when rogue MILF elements attacked civilian communities in Lanao del Norte, North Cotabato and Sarangani in protest over the aborted signing of the memorandum of agreement on ancestral domain (MOA-AD) which was later declared as unconstitutional by the Supreme Court.

Razon stressed that the government panel will work within the President’s new paradigm for peace in Mindanao which includes authentic dialogue with communities, interfaith dialogue and the principles of disarmament, demobilization and reintegration or DDR.

“Talks must also be within the parameters of the constitution. No talks on separation and must include concerns of the peace stakeholders,” he said.


Budget chief: No mass layoffs, only mass hiring in govt this year

Budget Secretary Rolando Andaya on Friday denied reports that there will be mass layoffs in government and even said the state machinery will be absorbing more employees this year.

“While the economic crunch had resulted in mass layoffs in the private sector, it is not true in the public sphere. In fact, there is a mass hiring in government. Funds for this purpose have already been earmarked in the 2009 national budget,” Andaya said.

Andaya made the statement in reaction to concerns aired by Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE), a progressive public sector union in the Philippines, that the rationalization plan of the government would displace a significant number of government workers.

The secretary said as a matter of fact, the budget of the Department of Education alone allows for the hiring of 10,000 teachers this year and another 2,000 members of non-teaching personnel of the line department.

“This will bring the number of teaching personnel of the DepEd to 506,000,” Andaya said.

Additionally, Andaya said funds have been earmarked for the hiring of 500 jailguards for the Bureau of Jail Management and Penology as well as the Bureau of Corrections.

Also, around 3,000 policemen will be hired this year to bolster the manpower of the Philippine National Police under the Department of Interior and Local Government.

Andaya said that under the recently-announced Nurses Assigned in Rural Areas (NARS) program, another 5,000 nurses will be employed to serve in the barrios and far-flung municipalities.

He also said that around P2 billion in the 2009 budget have been allocated for the government’s reforestation program, which authorizes the hiring of another 40,000 green-collar workers for the purpose and other energy-independent projects.

“The funds have already been set aside for these purposes,” the budget chief explained.

On top of these, Andaya said that state colleges and universities are authorized to hire additional academic personnel under their respective charters.

“All of these are aimed at cushioning the effect of the global economic crunch on the private sector, which had no choice but to cut down the number of employees due to the financial slowdown,” he said.

Andaya said that these government vacancies have already been allocated funds for the purpose of hiring personnel, and these are in addition to the plans of Malacanang to order government agencies to set aside 1.5 percent of their maintenance and other operating expenses (MOOEs); estimated at P7 billion, to hire 180,000 casual employees for six months.

He said that as it is, the government pays P427 billion a year, or roughly P1.17 billion a day for salaries, pensions and premium payments for government workers.

The Budget chief made this disclosure as government employees led by members of COURAGE protested the planned rationalization program of the state, saying this will lead to mass layoffs of employees.

Andaya clarified that the plan to abolish redundant positions in government had been advanced not only because of the cost of maintaining such, but to improve service delivery by cutting red tape through systems and organizational changes.

“But I will say this, those affected by the rationalization fund do not include professionals such as policemen, teachers, doctors, nurses, midwives and firemen,” he said.

The secretary said the implementation of the plan will be democratic, consultative and non-coercive, all part of creating a “smarter government.”

“This is our way of repaying the taxpayers with better, efficient government service,” Andaya explained.

He bared that in the consultations for the implementation of the plan, the accredited employees union of the agency will be represented on order to promote efficiency.

Andaya reiterated that the ones affected by the rationalization plan will not be removed, but are given three choices. They can be retained in their mother agencies if their skills are still needed and there are positions where they can be accommodated. The second option Is to be redeployed to other agencies without reduction in salary. The third is opt for retirement or early separation with incentives.

He enumerated the incentives as follows:

• Half of the basic monthly salary as of June 30, 2007 for every year of service, for those who have rendered less than 21 years of service

• Three-fourths of the monthly salary as of June 30, 2007 for every year of service, computed starting from the 1st year, for those who have rendered 21 to less than 31 years of service

• A month for every year of service, computed starting from the 1st year, for those who have rendered 31 years of service and above.

“The incentive is in addition to what they will get from the Government Service Insurance System,” he said.