CENTRAL BANK HEAD SAYS PHILIPPINE GROWTH ON TARGET The Philippines' first quarter growth figures released yesterday indicated the government was likely to achieve its 1987 targets, Central Bank governor Jose Fernandez said in an interview. The National Economic Development Authority (NEDA) announced yesterday gross domestic product (GDP) grew 5.78 pct and gross national product (GNP) 5.53 pct in the first quarter from a year earlier. "I don't see anything on the horizon that should cut it (growth) short," Fernandez said. NEDA said GNP had grown 3.56 pct and GDP 3.25 pct in the fourth quarter of 1986 from a year earlier. Last year's GNP growth, put earlier at 0.13 pct, was revised to 1.51 pct. "Certainly I do not see any shortage in external resources and if GNP growth continues at this level I would assume that domestic resources on the fiscal side would be generated and would not be a stumbling block," Fernandez said. "I think even before the figures came out, simply looking at key indicators, such as consumption of fuel oil and power, showed that the economy was on a different track from last year," he said. Fernandez said consumption tended to be heavier in the first and second quarters because of the dry weather, and it could drop off in the third quarter. He said the most significant sign of recovery lay in the manufacturing sector, which grew by 9.64 pct, after declines in 1985 and a slow turnaround in the second half of 1986. "That is not a seasonal thing, it is secular," he said. He said the government had met all monetary targets set for the first quarter in consultation with the International Monetary Fund (IMF). It expected to draw down the fourth tranche from its 198 mln SDR stand-by arrangement soon. The Philippines has so far drawn three tranches totalling 58 mln SDRs from the arrangement expiring on April 23, 1988. Fernandez said an IMF mission would visit here in July or August to review performance in the January-June period. He said IMF repayments were projected to total 1.56 billion dlrs over the 1987-92 period and drawings only 236 mln dlrs. Repayments were inevitable and many countries would find their net repayments to the IMF rising in the next few years. "It means that since there will be a net drain on ODA (official development assistance) accounts the commercial banking system will be requested to hold the line," he said. It is an internal constraint that exists because the IMF debt cannot be rescheduled, Fernandez said. The Philippines rescheduled 10.3 billion dlrs of its 28 billion dlr foreign commercial debt in March. Fernandez said Central Bank bills, introduced in March 1984 to mop up excess liquidity, had peaked at 43.1 billion pesos in April 1986. But their unwinding on maturity dates, started in October last year, had almost been completed. He said auctions of treasury bills, whose outstanding level touched 95.44 billion pesos on May 20, were going well. "Treasury bills will remain a basic monetary tool," he said. Commenting on the country's foreign debt Fernandez said, "I think the Philippine debt stock looms large because our own receipts from exports have not taken the same kind of leap forward as might have been suitable." The foreign debt is projected by the Central Bank to reach 29.04 billion dlrs by the end of 1987. NEDA said exports totalled 1.2 billion dlrs in the first quarter, while imports were 1.4 billion dlrs. Fernandez said the government had targeted GNP growth of between six and 6.5 pct this year. He cautioned that while growth so far was high the targets had not yet been achieved. Fernandez said he saw no merit in arguments by some economists that the peso, currently pegged at 20.50 to the dollar, ought to be devalued to make the country's exports more competitive. "By being pegged to the dollar on a basket basis the peso has already substantially devalued against all of the country's trading partners," he said. On the proposed Omnibus Investment Code, he said he was opposed to a clause which would allow the unrestricted repatriation abroad of investments made during the first two years after the imposition of the Code. The imposition of the Code, scheduled for last January, has been delayed by objections from some business groups. "I think any central bank, certainly this one after the events of the past two or two and a half years, has to be prudent. This is not the time to throw all caution to the winds and I'm not about to do that," Fernandez said. "It would be ideal if we reach a point where movement of capital and earnings can be free," he said. "We have had one year of reasonably good results. Certainly we continue to have a fairly heavy drain on our external availabilities simply by servicing our debts."