Philippines will not resort to capital controls: Finance ministry

MANILA (REUTERS) - The Philippines will not resort to capital controls as the economy is resilient enough to ride out the volatility in financial markets, while solid fundamentals and a strong external payments position offer advantages, Finance Secretary Cesar Purisima said on Friday.

Foreign investors will soon realise that the long-term growth potential of emerging markets, like the Philippines, is higher compared to advanced economies because of their demographic advantage, Mr Purisima said.

"There is really no need for capital controls," Mr Purisima told Reuters in an interview. "The Philippines is going through this period of volatility with more strength and with more vibrancy."

The Philippines was the fastest-growing economy in Asia in the first quarter, driven by robust consumption and government spending, and policymakers said this year's 6 to 7 per cent growth target is achievable.

"Our goal has been to strengthen the economic fundamentals of the country and the purpose of that strengthening is not only to put a strong footing and accelerate growth, but also to weather challenges like this better," Mr Purisima said.

Mr Purisima said he is determined to create more fiscal space for the government so it can spend more on infrastructure. The goal, he said, is to raise infrastructure spending to more than 5 per cent of gross domestic product from the current 3 per cent before President Benigno Aquino ends his term in 2016.

The Southeast Asian economy is aiming to extract more revenues from the mining industry via legislation of a new tax regime, and Mr Purisima said the government wants to see that proposed bill, which will soon be submitted to Congress, to be passed into law this year.