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HONG
KONG (via PLDT)–President Arroyo said on Tuesday that
the government may incur a "small" budget deficit this
year if the US slowdown becomes "more prolonged" but
maintained that "as of now," it continues to aim for a
balanced budget in 2008.
In a
pooled media interview in her suite at the Grand Hyatt
Hotel, the President said the country's creditors and
the international financial community have indicated
that they would not be averse to a budget deficit this
year if there is increased tax collection and continued
fiscal prudence.
"As of
now, our goal is still a balanced budget on the
assumption that the US slowdown will be short....But we
have to watch the situation. If the slowdown is more
prolonged, and we discussed this with the creditors and
the international financial community–they can
understand, they will understand a small deficit as long
as they see an increase in our tax effort," she said.
The
President said that the government will conduct a
"periodic review" of "how the slowdown in t he US
economy is growing, and that is the time when, if
necessary, we will make adjustments on our balanced
budget targetting."
"But in
any case, even if a decision is towards a small deficit,
there will have to be an increase in the tax effort and
spending must remain prudent. But as of now, at this
point in time, the goal is still a balanced budget," she
stressed.
The
Chief Executive added that the deficit, if incurred,
"will be very targeted" and spent on the shelved fiscal
stimulus package earlier proposed by Albay Gov. Joey
Salceda, her economic adviser.
"In any
case, even if we should decide on a small deficit...the
deficit will be very targeted. More or less the things
that Joey Salceda enumerated, should be the target. It
will go there. So it will still be prudent. The deficit
will still be very prudently managed, if ever," she
said.
In
January, Salceda had proposed a P75-billion economic
stimulus package to cushion the country against the ill
effects of a prolonged US slowdown, which includes P16
billion in tax rebates for middle class working families
and P8 billion in power rate discounts for those
consuming a maximum of 200 kilowatt hours per month; and
increased spending for agriculture (P15 billion),
food-for-school projects (P6), education (P6 billion),
health (P4 billion), housing (P4 billion) and
infrastructure (P16 billion).
Economic
managers have set aside the proposal as a "standby fund"
in case the US slowdown worsens, and have, in the
meantime, opted to frontload P45 billion for
agriculture, education, health and infrastructure
provided in the 2008 budget.
The
economic managers are expected to meet after the first
quarter of the year to assess the impact of the
US
slowdown, and to determine whether it is time to
consider
Salceda's proposal. |
