Camacho resigns; peso hits record low

By Clarissa S. Batino, Gil Cabacungan, Doris Dumlao, and Elena R. Torrijos

THE PESO tumbled to a record closing low of 55.585 to the dollar Friday after Finance Secretary Jose Isidro Camacho announced his resignation effective at the end of the month, saying he wanted to spend more time with his family and citing frustrations in his job.

Camacho, 48, the most senior economic adviser of President Gloria Macapagal-Arroyo, did not cite any particular reason for quitting his post. But sources blamed his resignation to a policy difference with Malacaņang in handling the issue against Government Service Insurance System president and general manager Winston Garcia.

He is viewed by the global financial markets as one of the more credible members of the administration

But a wave of resignations among Camacho's deputies is expected to follow soon.

The finance chief had recommended to Malacaņang the dismissal of Garcia for alleged mismanagement and corruption. But the President decided to keep the GSIS chief who is a scion of one of the more influential political clans in Cebu.

"We need competent, excellent people running the GSIS," said the finance chief.

Camacho also denied rumors that he asked the President to choose between him and Garcia. "I don't see myself that low."

Camacho said he was physically, emotionally, and financially spent in serving the government, when he submitted his irrevocable letter of resignation to the President effective Nov. 30.

"Between now and the end of the term, politics is going to take center stage. I do not have to participate in that. It is time to move on," he said during a hastily called press conference Friday.

"I feel very relieved and looking forward to going back to my private life," he told reporters.

Camacho was the country manager of Deutsche Bank before he joined the government first as Energy secretary in March 2001 and as Finance chief in June of that same year.

The President accepted the resignation of Camacho and tapped finance undersecretary Juanita Amatong, the most senior finance official, as officer-in-charge.

Finance undersecretary Eric Recto said he would also resign effective at the end of the month.

National Treasurer Sergio Edeza said would leave his post by January. "I told him (Camacho) in September that I am only good until the end of the year. I could stay until January."

Bureau of Internal Revenue Commissioner Guillermo Parayno Jr. said he would have to think it over seriously whether to stay or not while Customs Commissioner Antonio Bernardo said he was staying, for now.

Bernardo had been with Camacho since his stint at the Department of Energy while Parayno was personally convinced by Camacho to accept the post of BIR commissioner.

Camacho also personally convinced Social Security System president Corazon dela Paz to accept the job.

The announcement of Camacho's resignation came after the stock market closed at noon, but peso trading, which runs until 4 p.m., was hit hard.

Traders said many banks bought up the dollar on concern Camacho's move could hurt the government's efforts to restore fiscal discipline.

The peso closed at a record low of 55.585 pesos on the Philippine Dealing System after finishing at 55.290 on Thursday. Volume rose to 175.5 million dollars from 94.5 million dollars Thursday.

The last time the peso hit an all-time closing low was on Oct. 27 this year when it closed at 55.50 pesos. The peso dropped to a historic low of 55.75 pesos in intra-day trading on Jan. 17, 2001 at the height of the Edsa People Power II revolt.

In a statement, Malacaņang said the President and the Cabinet expressed their deepest gratitute and highest esteem for the three years of sterling service that Camacho has rendered to the nation first as Secretary of Energy from March to June 2001 and as Secretary of Finance.

Malacaņang said Camacho was instrumental in advancing the President's good governance and reform agenda while pushing for major reforms in public finance.

For his part, Camacho thanked the President for her trust and confidence. "I had a very good working relationship with the President. But it is really time to go," Camacho said.

Camacho said Friday he wanted to resign earlier but deferred it because the country was still reeling from the impact of the failed July 27 mutiny. He waited until the economy was more stable, he said.

He said he personally was not spared from controversies that have hounded the Macapagal administration.

"All the lies and all the things that you hear and you read about ... I mean, there are just too many of them," Camacho said.

Camacho said he believes he has filled his role as finance chief and helped build a foundation for fiscal strength and improved revenues, and instituted measures to fight corruption.

"The various agencies under the Department of Finance are in very able hands, so I am very confident that the work will continue, the reforms will continue, the programs will continue," he said.

Malacaņang said that Camacho had tendered his resignation last June.

Rumors of Camacho's resignation in the past had spooked both the currency and the stock markets.

"I'm sure there will be at the very least a temporary negative effect," on business sentiment, said Sergio Ortiz-Luis, chairman of the Philippine Chamber of Commerce and Industry.

He said Camacho had lent a face of credibility to the Philippine government in the global capital markets, and "the financing community here and abroad will be watching" who Ms Macapagal will name as replacement.

Traders said they expect the local stock market to be affected when it resumes trading on Monday.

Joseph Roxas, president of Eagle Equities Inc, said : "It will make the market nervous. The effect shall be negative until they find a good replacement. If the replacement has the same credibility with foreign brokers, it will be okay."

Astro del Castillo, director of Association of Securities Analysts of the Philippines, said the full impact of his resignation would be felt next week. "It will surely dampen sentiment in the financial and capital markets."

"It's a sad day for us. The possible lull in his reforms and programs is our biggest concern," Del Castillo said.

Businessmen were surprised by Camacho's resignation even though the former investment banker had hinted of leaving his post a few months ago.

Industrialist Raul T. Concepcion said Camacho's resignation was a "complete shock" to businessmen because it was totally unexpected and it came at such a brief notice.

"He is well respected by the financial community here and abroad. It happened so fast that the lack of adequate turnover could create undue anxiety in the community and a dampening effect on the foreign exchange rate," Concepcion said.

"We hope he can reconsider, he is one of the best finance secretaries this country ever had," said Francis Chua, executive vice president of Federation of Filipino Chinese Chamber of Commerce and Industry.

Employers Confederation of the Philippines president Donald Dee said Camacho's resignation was "unfortunate." "What is important now is to appoint his replacement as soon as possible in order to avoid speculation and to stabilize the markets."

Camacho resigned amid market jitters over the widening budget deficit ahead of the May 2004 elections.

"We are going to lose a credible and very competent public servant," said Wick Veloso, deputy treasurer of HSBC.

Federation of Philippine Industries president Jesus Arranza said he was surprised by Camacho's resignation having talked to him only on Wednesday where his group discussed reforms in anti-smuggling policies. Arranza said Camacho has been a good ally in the fight against smuggling.

Former Central Bank Governor Jose Cuisia said: "It is unfortunate that government is losing the services of a competent professional who has integrity and patriotism. However, I understand his reasons."

He noted that the resignation would temporarily create investor uncertainty, which was already indicated by the movement of the peso against the greenback and the widening of spreads of Philippine sovereign bonds Friday.

"His professionalism and selfless dedication are admirable and will be missed," Energy Secretary Vincent S. Perez said.

Bankers Association of the Philippines executive director Leonilo Coronel believes that the financial markets would be indifferent to his resignation because investors "know he has an almost impossible job, especially in an election year when probably he does not have control on the expenditure side."

Sources from Malacaņang said Camacho quit his post due to increasing pressure to keep the budget deficit within the programmed ceiling of 200 billion pesos and worsening feud with Congress which has sat on critical revenue enhancing bills such as the indexation of cigarette and alcohol taxes.

In a forum with the Foreign Correspondents Association of the Philippines in August, Camacho lamented that political turmoil has been pushing down the value of the Philippine peso and dampening the economy.

The peso has been battered since a coup attempt by mutinous troops in July and allegations of corruption and money laundering made by an opposition senator against Ms Macapagal's husband.

"The challenge for us in government," Camacho said then, "is to constantly try to refocus the attention of everybody, particularly the business sector, the financial markets and our public on the more fundamental issues, on what's going on in their lives ... and try to minimize the political noise that is so loud these days."

As the Cabinet officer in charge of the government's fiscal health, Camacho had struggled to reform the corruption-ridden internal revenue and customs bureaus, the government's main tax collection agencies.

Camacho was also responsible for the enactment of the Anti-Money Laundering Act, the rationalization of the excise tax on automobiles, and the impending passage of the rationalization of documentary stamp tax.

But Camacho leaves after restoring fiscal discipline in the national budget, which overshot the official deficit target last year, amid weak revenue inflows.

The January-October fiscal deficit stands at 163.88 billion pesos, or 4.7 percent below the limit, the finance department said on Wednesday.

The government believes it will be able to keep the deficit within the full-year target ceiling of 202 billion pesos.


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