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Prepared by Charalambos Christofides.
It should be noted that the analysis is based on medium-term estimates of the equilibrium exchange rate, and should not be taken as indicators of imminent short-term movements.
In 1988, debt restructuring agreements were concluded in line with a 1987 Paris Club agreement. In all, almost US$13 billion of debt was restructured, about 136 percent of 1988 exports of goods and services.
R.A. No. 5186 offered fiscal exemptions to exporters of both goods and services to stimulate exports of non traditional manufactures.
Including a jump in world interest rates, recession in the United States, and the Latin America in a Debt Crisis.
Culminating in the assassination of Ninoy Aquino in 1993.
Moreover, all but one quantitative restriction have been tariffied.
See Baig and Goldfajn, “Financial Market Contagion in the Asian Crisis,” IMF Working Paper, WP/98/155 (November 1998).
See Philippines—Background Paper, SM/95/253, Chapter I (September 25, 1995).
Income transfers were probably affected by rate of return considerations and by income considerations. In peso terms, fewer dollars needed to be exchanged to support a given income transfer following the depreciation of the peso.
This was in contrast to the experience in the early 1990s when most trade lines were not rolled over.
The stability of short-term foreign bank lines may be attributable to the fact that Philippine banks in the 1990s have become net depositors in the Euro-markets, with part of FCDU deposits redeposited abroad.
Mainly the IMF (extension and augmentation of the 1994 EFF, and a new SB A in March 1998) World Bank (a Banking Sector Reform Loan in 1998, and additional program loans planned for 1999), and the Asian Development Bank (with loans for energy sector, capital market and Metro Manila Air Quality development).
Most notably from Japan (OECF and JEXIM), and significantly expanded under the “Miyazawa” initiative.
Intervention during this period was mainly in the form of nondeliverable forward contracts between the BSP and market participants. The use of NDFs in the Philippines is briefly summarized in Box 2.
For example, in 1997–98, reflecting the impact of drought on food prices, the ratio continued rising notwithstanding the large depreciation after the float of the peso in mid-1997.
As estimated using a Hodrick–Prescott filter.
The CGER procedure produces an estimate for a “normal” current account (the so called “savings-investment norm”) by using a panel set of countries that are used as comparators (see Isard and Faruqee (1998)). The procedure allows for a “recalibration” of the result, to introduce a “fixed effect” correction intended to help match the predicted savings-investment norm with some historical average for the country. For the Philippines, the correction was made to match the average current account up to 1993 (later years were excluded so as not to contaminate what should be a medium-term estimate without the effect of recent events).
World Bank, “Philippines: Country Economic Review,” November 1998.