Foreign investors will also be watching closely to gauge the new president's capacity for strong leadership and her ability to manage the economy without losing the support of the broad coalition of forces that backs her. With the budget deficit already yawning at an alarming rate, Arroyo can't prime the pump with public spending. Nor can she roll up her sleeves and push through much needed economic-reform legislation. May. That means the new president must go on a marketing drive to polish up the country's tarnished image and lure back foreign investors driven away by the atmosphere of cronyism and corruption that surrounded Estrada's administration. I think people want to be convinced that she is going to make a difference right away and is bringing new energy to turning back a lot of the slippage that we saw from Estrada.
Overseas capital is vital to the Philippine economy.
Since the country has one of the region's lowest savings rates, the government relies on foreign investors to fund much of its budget deficit. Foreign direct investment is also badly needed to create jobs, as is portfolio investment to breathe new life into the moribund stockmarket. To be sure, in the administration's first week both Finance Secretary Alberto Romulo and Budget Secretary Emilia Boncodin warned that spending needs to be reined in and revenues boosted to bring the deficit under control. But the officials' statements on just how they would proceed remained vague at best. But that doesn't get them off the hook from outlining to everyone what they actually see happening.