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WASHINGTON,
D.C.—The Philippine government cannot afford to pursue
growth and inflation, now moving in opposite directions,
on stand-alone basis, the Finance chief said here, as he
underscored Sunday the government stance to strike a
balance to shield the greatest number of Filipinos from
the ill effects of a global slowdown.
In an
interview, Finance Secretary Margarito Teves said the
highest possible output was still expected from the
economy—seen to expand by a range of 6.3 up to 7 percent
in terms of the gross domestic product this year, the
escalating price of rice and the expected US slowdown
notwithstanding.
“We are
concerned [with] both,” he said, referring to growth and
inflation. “We do not want inflation to range very high
because a lot of Filipinos continue to live below the
poverty line, where price changes are felt the most,” he
said.
But he
acknowledged that sustained high growth this year has
become increasingly difficult to achieve, particularly
if the US economy, still the country’s top export
destination, succumbs to a recession.
Teves
said economic managers continue to pin their hopes on
growth averaging at least 6.3 percent this year, or the
low end of the growth target.
“But it
is not going to be easy,” he said.
According to him, it was important for Filipinos to
continue to have employment opportunities and have the
money to spend for their needs, like rice, for instance.
“But
even if people have income opportunities but prices move
up too quickly, then there could not be enough of it to
meet their needs,” he stressed.
Long
lines of people queuing up for state-subsidized rice, at
roughly half the price of commercial varieties, has
starkly brought home the economic crisis felt by
ordinary Filipino households in the past weeks.
The rice
spikes are not their sole concern: rising flour prices
have caused the ordinary pan de sal, the everyday
breakfast bread, to be 20-25 percent costlier; processed
meat groups announced last week they will increase
prices mid-April; and vegetable and fruit traders have
said they must pass on to consumers the steady increases
of transportation costs from rising gas prices.
Nonetheless, Teves credited Bangko Sentral governor
Amando M. Tetangco with acting quickly by sapping excess
liquidity in the system that helped stanch domestic
price pressures.
“Food
prices were heavily influenced by factors outside of our
control like floods in Bangladesh and increased demand
from some countries. But to the credit of the BSP, it
managed the liquidity situation very effectively and
this helped us manage the fiscal side better also,”
Teves said.
The
International Monetary Fund (IMF), which has just
concluded its spring meetings in which the supply
problems of rice-importing countries like the
Philippines were highlighted, has lowered Manila’s
growth outlook to 5.8 percent from 6 percent previously.
The
reduced growth prospect has caught the attention of the
BSP, whose top executives remain optimistic of a more
sustained growth trajectory.
Teves
said the
Philippines
may yet surprise everybody even if the forecast
consensus was of growth lower than 6.3 percent this
year.
Deputy
BSP governor Diwa C. Guinigundo said growth in the
Philippines has increasingly become private
sector-driven, even as government has done its part of
spending more for infrastructure and for social services
for optimum impact.
“They’re
[private sector] taking the lead. Also, we now have a
stronger financial system that has exhibited resilience
and growth even amid a more challenging environment,”
Guinigundo said. |
