^

BSP still on wait-and-see mode amid US debt deal

Kathleen A. Martin (The Philippine Star) - October 18, 2013 - 12:00am

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is still on a wait-and-see mode despite the passage of a US spending measure ending a government shutdown and averting a possible default, a central bank official said yesterday.

In a text message to reporters, BSP Deputy Governor Diwa C. Guinigundo said that they are still on a wait-and-see mode as the US only pushed back its deadline to raise the debt ceiling to Feb. 7 from the original Oct. 17.

“The US has just avoided what otherwise could have been a financial conflagration. But we should not treat this as an open-ended extension of peace time,” Guinigundo said.

“The agreement to adjust the debt ceiling will be good only until February 2014. We might be back to this wait and see situation by then,” he continued.

The US Congress, hours before the Oct. 17 deadline to raise the debt limit, finally passed a deal that offers to fund the government until Jan. 15 next year and to raise the debt ceiling before Feb. 7.

The move ended a 16-day partial shutdown of the US federal government and weeks of political standoff amid deciding to hike the $16.7-trillion debt ceiling.

“In the interim, central banks and government holders of US treasuries will have to make the necessary adjustment, although difficult and options are not readily available,” Guinigundo said.

“Everybody else will have to brace himself for a possible heady ride through market volatilities. Perhaps we need to prepare truly for a new normal, or for some people, new abnormal,” he added.

The temporary deal reached by the US government means it may face another shutdown next year. Moreover, further uncertainties will hound global financial markets again early next year as another round of battles may ensue to the debt ceiling.

“The challenge is really to get back to higher, more sustainable economic growth built without dependence on excessive financial leveraging,” Guinigundo said.

“That will of course require sustained policy reforms, intensified oversight of the financial system, avoidance of asset price inflation, continued fiscal and monetary policy coordination.”

BANGKO SENTRAL CEILING DEBT DEPUTY GOVERNOR DIWA C FEB FINANCIAL GOVERNMENT GUINIGUNDO JAN PILIPINAS
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with