Omar Cruz, the National Treasurer of the Philippines has resigned his post effective from the June 1st, after just over two years of service. In his first interview after his resignation Cruz explained that his decision was due to family pressures and career objectives. “My 84 year old mother is ill and I need to spend some time with her. But I also feel that my services are dispensable; I have now established the processes and programs necessary for the continued success of our debt management strategy”.
He was the fifth national treasurer to leave the Arroyo administration, and there has been media speculation that his decision was due to policy differences with the government and disagreements with monetary officials. Seeking to quell such rumours, Cruz explained: “There have been no policy disagreements, I have been given full powers to handle fiscal management programs”.
He announced his resignation on Tuesday, the same day the finance ministry revealed that government had missed its first quarter budget deficit target. And Cruz offered some advice to the Arroyo administration: “new tax revenues are obviously needed to bridge the shortfall. I only expect a balanced budget will be possible in 2008.”
News of his resignation initially prompted a weakening in the peso, and although it recovered from earlier losses, ten-year bonds yields rose 17 basis points, to 7.412 percent, according to the Philippines Dealing & Exchange Corp in Manila.
But Cruz was confident that market unrest would prove to be a temporary blip as the country’s finances and the office of the treasury is well in order. “The country has good macro-economic prospects and it will be an easy task for the next treasurer to carry on the institutional processes and liability management exercises which I set up”.
As chief of the country’s bureau of treasury, which manages the government's foreign and domestic borrowings, the former Citibank executive, is highly regarded by investors for restructuring the country's $81 billion debt pile and successfully completing a $1 billion sovereign bond issue in January. He was credited for restructuring the Treasury with active and transparent debt management exercises with robust benchmark sizes and deep, liquid issues as well as developing the peso bond market.
Finance Secretary Margarito Teves said the government has begun looking for a replacement to Cruz. But Simon Paterno, managing director and country manager for the Philippines at Credit Suisse cautioned: “I hope his replacement will buy into the philosophy of Omar; his absolute confidence and respect for the markets and his reliable and transparent policies. International acclaim is a signal that his legacy should not be touched”.
Cruz now intends to work in the private sector after spending time with his family. Earlier this year, Indonesia overtook the Philippines as Asia's second-largest issuer of offshore bonds as Cruz sought to develop local capital markets through the issuance of domestic debt.