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THE
Executive put on a brave face Thursday on news that
growth in the first quarter was slower than hoped for,
at 5.2 percent from last year’s 7.0 percent, saying the
country will post better growth figures in the second
quarter because of increased targeted spending on vital
sectors. This, after the government abandoned its
balanced-budget target for the year in favor of a
P75-billion deficit.
The
government’s economists had pinned the blame for the
slackening on rising oil prices, the slowdown in the US
economy and the negative effects of a strong peso.
“The
results for the first quarter are still within
expectation, but we expect to make up for it in the
second quarter because the government will spend on
necessary [items] to help vital sectors. And we can
count on the government to take all the necessary steps
to attain its revised 5.7-percent to 6.5-percent growth
target for the year,” Press Secretary Ignacio Bunye said
in an interview.
Budget
Secretary Rolando Andaya Jr. said in a statement the
government will meet its new balanced-budget target in
2010, and that the Department of Finance has committed
to meet its P1.2-trillion revenue target this year “to
ensure that there are enough resources to cover our
programmed spending for this year and the coming years.”
The
government, he said, is bent on balancing the budget by
2010 to enable it to “sustain the much-needed
infrastructure and social programs in the next two years
to provide for more jobs and poverty alleviation
measures in the face of tougher external conditions.”
Cabinet
Secretary Ricardo Saludo said, “With sustained
investments and dollar inflows from OFWs, exports and
tourism, we shall sustain our record 29 consecutive
quarters of GDP expansion under President Arroyo.”
Bunye
said that while external challenges are exerting
pressure on economies around the world, including the
Philippines, the government believes its reforms “are
working to provide a firewall against major global
economic disruptions.”
The
economy, he opined, has “matured and diversified so much
in the last few years that our economic turnaround is
permanent.”
Bunye
said the country’s 5.2-percent GDP growth for the first
quarter “shows that our economy continues to have solid
momentum” but “high oil prices and reduced global
demand, particularly in the United States, for some of
our nation’s exports have forced our economic team to
reduce the target for GDP growth for this year,”
originally set at 6.3 percent to 7 percent.
“The
President is carefully monitoring economic developments
to ensure that there is continued investment in key
infrastructure that will enhance the competitiveness of
the Philippine economy and in the education, health and
other social programs that will improve the quality of
life of millions of our countrymen and women who are
impacted by the challenges brought about by the new
global economic environment,” he said.
With the
deferment of the national government’s target of
achieving a balanced budget to 2010, the National
Economic and Development Authority (Neda) said earlier
it is eyeing a maximum deficit of 1 percent of GDP for
the year.
The
Development Budget Coordination Committee (DBCC) meeting
on Wednesday decided to limit the deficit to 1 percent
of the GDP or around P75 billion to increase the
expenditure of the government and help shield Filipino
consumers from the ill effects of high inflation, Neda
Acting Director General Augusto Santos said.
“In
order to sustain growth, in order for the economy not to
suffer [a] less than desirable [economic state], the
government needs to spend more to arrest the economic
slowdown. Subject to certain information, we are
thinking of an upper limit of 1 percent of GDP [as]
budget deficit by end of 2008. One percent of GDP is
about P75 billion,” Santos said in a press briefing on
the National Income Accounts (NIA) in Makati City on
Thursday.
He said
that without the P75-billion spending of the government,
the country’s GDP will only reach the lower end of the
DBCC’s full-year GDP projection of 5.7 percent to 6.5
percent in 2008.
To
finance the additional expenditure,
Santos
said the government will likely resort to a supplemental
budget, which the Cabinet will submit to Congress soon.
Santos
said the government is also open to foreign and local
borrowing using a debt mix of 70 percent to 30 percent
in favor of domestic borrowing.
He added
that proceeds from the sale of government assets and a
projected increase in tax collection would also be used
to finance the P75-billion expenditure this year.
With
this, Santos said the government expects public
construction to pick up by the second and third
quarters. As Neda chief, he earlier said it would be
best to invest the additional funds in infrastructure
projects.
The Neda
also sees a continuation of subsidies. Currently, the
government is subsidizing the cost of rice through the
rice sold by the National Food Authority (NFA), oil
import taxes, food for school and Pantawid ng Pilipinong
Pamilya programs.
“It’s
really a tough environment and it is putting pressure on
the poor. [This is why the] government is consciously
spending much more,” Santos said.
Earlier,
the Neda expressed concern that around 6.4-million
Filipino families earning a total gross income of
P10,000 and below a month will become highly susceptible
to high oil and food prices.
Santos
said there are 4.7 million families earning a total
gross income of P10,000 a month while there are 1.7
million families who are considered food poor and are
earning less than P10,000 a month.
He said
that based on the National Statistics Office (NSO),
Filipino families have an average size of five members.
The Neda said this means a total of 32 million Filipinos
will be severely affected by high commodity prices.
If food
prices, particularly rice, increases further, Santos
said the effect will become worse because 50 percent of
the income of families go to food and 50 percent of the
food budget is allotted to rice.
In order
for families to avoid being susceptible to high prices,
Santos said they need to earn a gross income of around
P13,000 to P14,000 a month or a gross family income of
P156,000 to P168,000 a year. |
