PHILIPPINE FINANCIAL CRISIS

                                                                         PHILIPPINE FINANCIAL CRISIS

The Philippines hasn’t survived unscathed because it is well integrated into the rest of the region in terms of its trade flows. But the big plus has been that a lot of exports go to the US, and of course, the US has maintained good growth. This is good news. It means that the Philippines hasn’t had to rely on exports within the region, it can rely on US and European demand for its products. Its export growth has remained at 15-20% so its trade account has not been too disastrous.

However, the big problem for the Philippines is that it has a large amount of foreign debt compared to its gross domestic product and the size of its wealth. It’s not a very big country in terms of GDP, but it has big foreign debt from the past. Its currency has also slid with the rest of Asia’s currencies so the debt servicing bill is building up.

Perhaps more importantly it has started to run a budget deficit as the economy has slowed down and moved towards zero growth. It’s not been able to sustain a balanced budget domestically. Partly that’s due to the increased debt servicing and partly that’s because its governments have continued to spend on various favoured sectors.

Source: http://www.boostworks.com

REACTION

     It has been said in the article that the Philippines hasn’t had to rely on exports within the region because it can rely on US and European demand for its products. But first problem is the US is facing a financial crisis nowadays and many of their companies collapsed. The US financial crisis could have a  very big impact on the Philippine economy because as said, Philippines are relying its exports to them. Second, knowing that the Philippines has a large amount of foreign debt compared to its gross domestic product and the size of its wealth, it would be a very huge problem. Basically, there is this financial problem and then here comes the exporting problem which will be an addition to the financial crisis which the Philippines is facing.

     Third problem is the mere fact that the Philippines has started to run a budget deficit as the economy has slowed down and moved towards zero growth, it’s not been able to sustain a balanced budget domestically. Furthermore, what is the current issue in the country now? The issue here is "the Philippine economy is currently facing the problem of cushioning the effects of the global financial crisis on the productive sectors as well as on the most vulnerable group, the poor."

Here is the government's budget on different sectors:

Budget Allocation	Millions of Pesos (PHP)	Millions of US Dollars (USD)	%
Department of Education	₱207,300	$4,573	30.86
Department of Public Works and Highways	110,600	2,439.8	16.46
Department of National Defense	104,700	2,309.7	15.58
Department of Interior and Local Government	88,200	1,945.7	13.13
Department of Agriculture	37,700	831.7	5.61
Department of Social Welfare and Development	34,300	756.7	5.11
Department of Health	33,300	734.6	4.96
Department of Transportation and Communications	32,300	712.5	4.81
State Universities and Colleges	23,400	516.2	3.48

     Now the fact that the govenment's budget for the public's social welfare is only 5 percent, it is really not a help for the poor. The country's population is dominated by our poor countrymen. The government could not afford to help all of those. How much more now that the government is facing a huge financial crisis.

     From my own experience, I can really say that there is really a financial problem in our economy today. Our business for the past years were running really good, we have a bigger income and we purchase the products that we sell on cash. And even if there is an increase of the price, still there is no change in the income. From that status of our business, of course my parents could give me what i want , I can enjoy my desires even if it's too much. But nowadays, we have smaller income compared on the past years,  it's because people tend to reduce their budget for the product that we sell mainly because of the financial problems. Also, we could not increase the prices of our products rightly for the reason that there is a competition among the other sellers of the same product so we have to maintain a good price.  So as we get not that bigger income, sometimes we tend not to pay in cash the supplier of the product that we sell. The supplier will also agree mainly because if they don't let us to pay later, they could not also sell their product in cash in any other business owners nowadays. When we have the much bigger income luckily, we would pay the supplier after a week, if not after a month. And so , because of that financial problem of the country that affected our business, I can longer get what I want as much as I can before. Today I can get what I need, but wants? maybe I can still get those but I should have to wait for a week or month, unlike before that I can purchased it rightly.

:(
     As a student, I am not able to pay the country's debt nor change the percentage of the budget for the welfare of the poor but maybe just help my parents in running the business and the least that I can do is to save some of my weekly allowance and maybe forget those useless desires (even if it's too hard because temptation is all around...the mall!).