Government posts P6.8 billion November Surplus, and international developments.

Cebu, PHILIPPINES, Dec 30, 2014 – On the eve of New Years, the government’s department of finance released the year to date fiscal figures showing a fiscal deficit of P26.8 billion, a deficit 76% smaller than the same period last year.

This after the country also posted a 4th consecutive monthly surplus of P6.8 billion in November, larger than the same period last year by P1 billion.

These figures were largely unsurprising for analysts, which had tracked a slowdown in 3rd quarter growth in the economy, due to a lack of public infrastructure spending (which, in turn, exacerbated other areas within the economy, most noticeably in international trade). The peso dropped 16 centavos with 1 USD buying P44.78 at the end of trading today following the announcement, its lowest level against the greenback in two weeks.

Total revenues in November, meanwhile, hit P158.2 billion, while year-on-year, total revenues reached P1.74 trillion, a healthy growth of 10.8% from the previous annum.

While local analysts have been relatively bearish due to the underspending, the financial health of the country remains strong with smaller interest repayments leading to a year to date primary surplus of P265.5 billion ($5.94 billion), 43% higher than the same period last year.

Li & Hungerford remains fairly bullish through the start of 2015, as this extra financial capacity that was not expected at the start of 2014 will likely hold this Philippine economy in good stead, especially valuable considering persistent uncertainty in other markets. NEDA has already flagged a resumption in public infrastructure spending next year, which should boost GDP growth in 2015.

In Russia, despite somewhat slowing the decline of the ruble, the government is still dealing with investor panic, as it continues to slide beyond fundamentals, and the country deals with double digit inflation.

Elsewhere, all eyes are turned towards Greece, where the failure of the government to elect a president has led to the declaration of snap elections in January, where the anti-austerity political party, Syriza, has been leading opinion polls. This, mere weeks before its 240 billion Euro bailout expires.

Syriza pledges to annul the bailout agreement, significantly increase the salaries and pensions of civil servants, and vows to renegotiate repayment terms on loans from euro member states and on Greek bonds held by the European Central Bank, however, they do not advocate an exit from the euro area. This puts in danger the recent signs of life the Greek economy has been exhibiting, as none of their advocated policies would allow Greece to remain in the euro zone. Greece’s international lifeline of credit risks being severed, and the EU could be in danger of political contagion with similar political movements also arising out of the debt-ridden Spain and Italy.

Should this occur, the recent 10-year inclusion to the EU’s zero-tariff trading scheme would likely yield much less benefit to the Philippine economy than the projected 600 million euros worth of exports, and 267,000 jobs.

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