International Financial Management Report-the Philippines

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Table of contents

Introduction2

Country Overview2

The Political Environment3

Recent History3
The Present Government3
Political Stability4
Opposition Parties4

Economic and Financial Analysis5

Trade History & Major Products5
GDP Growth per capita5
Unemployment & Price level Changes Inflation6
Exchange Rate Innovations7
Investments in the Stock Market7
Investments in the Bond Market8
Foreign Exchange Reserves9
Structure of Industries10
The Banking System10
Monetary Policy / Money Supply Growth11
Foreign Debt12
Capital Flight12

Asian Currency Crisis13

Philippines before the crisis13
What caused the Asian Currency Crisis? The effect it had on the Philippines and other countries13

Looking into the Future17

Prevention as the Best Form of Management17
Some Policy Lessons From the Asian Crisis17
Need for Great Caution About Financial Liberalization and Globalization17 Manage External Debt Well and Avoid Large Debts17
Manage and Build Up Foreign Reserves17
The Need for Capital Controls and a Global Debt Workout System18

Conclusion: Summary / Comments / Recommendations19

Works Cited21

Appendix A23

Appendix B24

Appendix C25

Appendix D26

Appendix E27

Appendix F28

Introduction

The Philippines were ceded by Spain to the US in 1898 following the Spanish-American War. They attained their independence in 1946 after being occupied by the Japanese in World War II. The 21-year rule of Ferdinand Marcos ended in 1986 when a widespread popular rebellion forced him into exile. In 1992, the US closed down its last military bases on the islands. A quarter-century-old guerrilla war with Muslim separatists on the island of Mindanao, which had claimed 120,000 lives, ended with a treaty in 1996 (www.odci.gov). The Philippines lies off the southeast coast of the Asian mainland. It has approximately 7,100 islands and islets located near the southeastern rim of China. Bordering its coastline to the west and north is the China Sea; to the east is the Pacific Ocean; and to the south, the Celebes Sea and the coastal waters of Borneo. The Philippines' location in Asia is strategic since it is situated on the crossroads of Asia's commerce and transportation. It plays a significant role in international affairs [Appendix A fig. 1] (www.abisnet.com).

Country Overview

Two major languages are spoken in the Philippines: Tagalog and English. Ninety percent of the population are Christians and about 10 percent are Muslims. There is a tropical and humid climate in the lower land areas, but this becomes cooler at the higher altitudes (www.odci.gov). The land area totals 298,170 square kilometers, and the Philippines has a total population of approximately 80 million people. The capital of this large island country is Manila located on the island of Luzon. There are numerous islands in the Philippines that are all prone to earthquakes. Within the Philippines, there lies large mountainous terrain, narrow coastal plains and interior valleys and plains. There are also vast amounts of dormant and active volcanoes, notably Mount Pinatubo in Central Luzon (http://lcweb2.loc.gov).

The Political Environment

Recent History

The Philippines has traditionally had a private enterprise economy both in policy and in practice. The government has intervened through fiscal and monetary policy and in the exercise of its regulatory authority. Although expansion of public sector enterprises occurred during the Marcos presidency, direct state participation in economic activity has generally been limited. The Aquino government set a major policy initiative of consolidating and privatizing government-owned and government-controlled firms. Economic planning was limited largely to establishing targets for economic growth and other macroeconomic goals, engaging in...
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