MANILA, Philippines — Economic relations between the US and the Philippines are “unlikely” to suffer as a result of President Rodrigo Duterte’s comments against the country’s long-time ally, lender and development partner.
“(It’s) unlikely to have impact,” Socioeconomic Planning Secretary Ernesto Pernia said in a text message on Tuesday.
Budget Secretary Benjamin Diokno agreed. “There is unlikely to be any problem since investors are usually looking at macrofundamentals,” he said in a phone interview.
Admitting he is not a “fan” of the US, Duterte said Monday that he intentionally missed a summit with US President Barack Obama but not before he criticized the US president over the possibility of raising human rights issues in the Philippine government’s war on drugs.
Obama, as a result, cancelled his first bilateral talks with Duterte, who, upon returning to the country also called for a pullout of US troops in Mindanao. A Palace spokesperson later on clarified that no official policy has been made to such effect.
According to separate official data, the US is the biggest source of equity foreign direct investment (FDI) last year, accounting for 61.8 percent of total at $271.72 million.
“Most investors will focus more on the economy’s strong fundamentals. For as long as we are performing well, then that will be fine,” Diokno said.
The US is also the largest holder of Philippine debt at $13.29 billion, equivalent to 17.11 percent as of the first quarter this year, but the Budget official said even this should not be a cause of concern.
The country was also the second-biggest source of official development assistance (ODA) in 2014, and the government had already programmed 80 percent of its foreign borrowings from ODA next year.
Interest rates on money being lent, the budget chief said, will remain market-driven, adding that the bulk of Philippines’ ODA come from Japan.
“Remember also that by next year we are sourcing minimal amount from foreign borrowings,” Diokno said. Rates of existing ODA are normally fixed.
In terms of overseas Filipino remittances, he explained that while data would show US as top source, this is in fact a “misnomer”.
Central bank figures showed 32 percent or $4.28 billion of total remittances as of the first semester coming from the world’s superpower.
“The reality is that most remittances are just coursed through the US, particularly New York, because of the banks,” Diokno said.
“But, actually, our primary remittance source is the Middle East,” he added. The Bangko Sentral ng Pilipinas takes note of such practice on its database.
Diokno, however, did not comment on the country’s trade relations with the US, which is the second-biggest export destination and fourth-biggest source of imports.
He however maintained that the Duterte administration’s economic program remains intact.
“We continue to see strong economic performance,” Diokno said.