Among emerging economies: Philippines ranks 6th best in fight vs COVID

MANILA, Philippines — The Philippines has been ranked as the sixth strongest among 66 emerging market economies in facing the coronavirus disease 2019 or COVID-19 pandemic, according to  London-based publication The Economist.

The financial paper ranked 66 countries that are relatively safe and are in distress based on four potential sources of peril including public debt, public and private foreign debt, borrowing cost and reserve cover.

Botswana, Taiwan, South Korea, Peru, and Russia were the top five strongest countries  while Venezuela was the weakest.

According to The Economist, Russia, Peru, and the Philippines look relatively robust while  30 are in distress or flirting with it.

COVID-19 hurts emerging economies by locking down their population, damaging their export earnings, and deterring foreign capital, The Economist said.

According to the International Monetary Fund (IMF), emerging economies would need at least $2.5 trillion to weather the health crisis.

It said 66 economies need to find over $4 trillion to service their foreign debt and cover any current account deficits

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Philippines being ranked  as one of the strongest among emerging economies reflects the country entered the health crisis from a position of strength.

“The Philippines before the COVID-19 crisis was on the road to A-rating. We’re not saying that the Philippines has not suffered from this crisis, together with the rest of the world,” he said in a text message to reporters.

Diokno said other countries are not well positioned, noting that the Philippines could put into good use the fiscal and monetary space from past reforms and prudent management of the economy to address the COVID-19 challenges.

“But our relative position among emerging economies gives us confidence that the Philippines would have a U-shaped bounce back once the pandemic fades,” Diokno said.

He said the country’s gross domestic product (GDP) would likely contract by 0.2 percent instead of one percent this year before bouncing back to a 7.7 percent growth next year amid measures taken by monetary and fiscal authorities to soften the blow of the COVID-19 pandemic.

“The strong economy may be attributed to the well crafted economic plan, the close coordination and competence of President Duterte’s economic team, and the President’s strong leadership in getting the much needed legislation passed by Congress,” Diokno said.

The BSP’s Monetary Board makes sure there is enough liquidity at this critical time.

It entered into a repurchase agreement with the Bureau of the Treasury involving P300 billion worth of government securities.

The central bank has also reduced the overnight reverse repurchase volume offering, suspended the weekly term deposit  auctionfacility , and reduced to zero the spread in the peso rediscounting facility to encourage banks to re-channel funds into loans or government securities.

It also continues to ease regulatory measures to encourage lending to micro, small, and medium enterprises (MSMEs) severely affected by business shutdowns due to the enhanced community quarantine to prevent further spread of the deadly disease.

According to the BSP, it stands prepared to use its full range of monetary instruments and to deploy regulatory relief measures as needed in line with its price and financial stability mandates.