Purisima lauds US budget deal

MANILA, Philippines - Finance Secretary Cesar Purisima yesterday welcomed US lawmakers’ efforts to end the fiscal impasse and reopen the federal government but at the same time urged them to find a long-term budget solution to finally lift the cloud of uncertainty hanging over the global economy.

Republican and Democratic senators agreed Wednesday to raise the US Treasury’s debt ceiling through Feb. 7, raising the possibility of another shutdown early next year.

“The measure passed by the US legislature is a positive development that buys time, however, I would like to emphasize the need for a more permanent solution, especially to the issue of its borrowing limit,” Purisima said in a statement.

“If the US is to maintain its role as the printer of the global reserve currency, its leaders cannot view going to the brink of default as a viable political tool. So-called ‘governing by crisis’, where the entire world’s economy has to be held hostage to force a decision, cannot be allowed to become standard operating procedure in Washington. Because the world’s economies are connected even as far away from the US as the Philippines, every standoff between America’s ruling parties forces the rest of the world to watch with anxiety,” Purisima pointed out.

Purisima said the US should look seriously at a more permanent solution to deflect the world economy and financial markets from its domestic political squabbles.

He said the IMF itself has warned of the possible effects of the US defaulting on  its debt – skyrocketing interest rates, carnage in US equities, and exploding volatility in the foreign exchange markets.

“While the growing threat of a US credit default emanates largely from the prolonged political impasse in the US Congress, serious adverse repercussions are already being felt in the international financial markets. Such are the ramifications that come with being the world’s most important economy – the actions of the US extend far beyond its own economy in our world of irreversibly increasing connectivity,” Purisima said.