Philippines to hold off on capital controls, for now


Mon, May 06, 2013 - Page 15

The Philippines has no plans to impose capital controls for now, its central bank governor said, as the nation tries to manage inflows spurred by faster growth.

“We are not considering the imposition of capital controls right now,” Bangko Sentral ng Pilipinas Governor Amando Tetangco said in an interview on Saturday near New Delhi at the Asian Development Bank’s annual meeting. “So we rather see if there is a need to sharpen the tools that we have in the enhanced toolkit as a response to further inflows of capital.”

Standard & Poor’s raised the Philippines’ rating last week to investment grade after a similar upgrade by Fitch Ratings in March, moves that may lure foreign investors.

Philippine President Benigno Aquino III is fighting graft and tax evasion to limit the budget deficit, while boosting expenditure on infrastructure such as roads to support economic growth of more than 6 percent.

“If the inflows are hot money, we need to be careful about those because they can lead to financial volatility,” Tetangco said.

The central bank last month cut the rate it pays on special deposit accounts for a third time this year to curb inflows and temper the Philippine peso’s gains. It kept the benchmark rate at a record low 3.5 percent.

The peso is the biggest gainer in the past 12 months after the Thai baht among 11 Asian currencies tracked by Bloomberg, strengthening about 3.3 percent versus the US dollar. The Philippine Stock Exchange Index has risen 36 percent in the same period, exceeding the 13 percent climb in the MSCI Asia Pacific Index.

Aquino is seeking more than US$17 billion of infrastructure investments to spur growth. The Philippine economy expanded 6.8 percent in the fourth quarter from a year earlier.