7% GDP growth in 2007: Can we do it again?

The Senate should be able to finish its work on the proposed budget for 2008 before the end of the year, so that we can start the New Year with a timely spending package. The Senate has temporarily suspended legislative inquiries so it can concentrate on deliberating on the proposed budget.

It doesn’t mean that we’re abandoning our role as fiscalizer; that is part of our essential mandate as a lawmaking body. The Senate will resume hearing pending issues as soon as we finish work on the budget and other urgent measures.

In general terms, I think that we have a growth budget but it is not as impressive as I would want it to be, considering that it was prepared based on a projected economic growth of between 6.1 percent and 6.8 percent in terms of gross domestic product, or GDP.

I understand the government has revised its growth forecast to 6 percent to 7.8 percent for 2008 and to 7 percent and 8 percent for 2009, with higher government spending, rising investments and consumer spending as the main drivers.

Although the figures and agency allocations may still be adjusted, I note that significant funding has been proposed for social services—P363 billion (up from P321 billion) and economic services—P289 billion (up from P246 billion).

In fairness, I think the P1.227-trillion proposed budget for 2008 is a good formula, considering that the government wants to control the deficit as well. But I would give more weight on working to sustain a 7.5-percent GDP growth, even if we have to ease a little on deficit control, which means less spending on infrastructure and vital public services.

Rather than curtailing expenses, the government should continue improving revenue generation, both through privatization and increased collections. Proceeds from the sale of government assets have been a big help on the revenue side, and we could expect more funds from privatization next year, including the sale of the transmission assets of the National Power Corp., under the National Transmission Corp., or TransCo.

It’s a good time for privatization because the stock market is bullish and the values of corporate assets are rising. For instance, the P58.5-billion winning bid for the government’s 60-percent stake in the Philippine National Oil Co.-Energy Development Corp. is a good figure. In the past, when we talked about privatization we were discussing much lower figures.

So we have a strong position in terms of controlling the deficit in 2007 and 2008 and, as I have always maintained, we don’t have to be too concerned about the spending and revenue gap.

Our GDP grew by 7.5 percent in the second quarter, the first time in two decades, and everybody is confident that full-year GDP growth will average 7 percent, a big jump from the 5.3 percent that we achieved in 2006. I even think 7.5 percent for the whole of 2007 is not an unreasonable projection, given the current state of the economy.

What I’m worried about is the sustainability of economic growth. If we can at least hit 7 percent for two years, it will put us on a new paradigm, a new level. The world says, okay, you got 7 percent for 2007, but can you do it again?

This is a good chance for us to earn that confirmation and the honor of rising to a higher growth level, a very welcome break from our traditional laggard role in Southeast Asia.

First, we must continue improving revenue collections to maximize results from existing tax laws and regulations. Revenue agencies must continue to look for loopholes that allow revenue to escape, and simplify procedures to encourage taxpayers to pay their obligations.

Second, we must take advantage of the strong market values to maximize proceeds from privatization. The government still has a big basket of assets that can be monetized, including shares of stocks in big corporations like the Manila Electric Co.

Third, we must focus more on growth-enhancing expenditures to sustain high growth rates instead of worrying too much about the deficit. Remember, the United States, the biggest economy in the world, also has the world’s biggest deficit problem, but remains among the strongest economies.

Sustainable high growth—this is the best legacy that any President can be proud of. 

You may send your comments/ feedback to mbvillar_comments@yahoo.com

Why do we have this nagging feeling that the short-lived rebellion by Sen. Antonio Trillanes IV and Brig. Gen. Danilo Lim at the Peninsula Hotel in Makati on Thursday would certainly not be the last?

I spoke too soon.  I mean, I wrote too soon. Less than a month ago, the Congressional Committee on Justice slammed the door on the Tamano supplement to the original Pulido impeachment complaint.

It is difficult to escape clichés—at work, at home. In almost every aspect of your life, you will hear them, even use them.

The Entrepreneur: 7% GDP growth in 2007: Can we do it again?

The Senate should be able to finish its work on the proposed budget for 2008 before the end of the year, so that we can start the New Year with a timely spending package. The Senate has temporarily suspended legislative inquiries so it can concentrate on deliberating on the proposed budget.

It is well that Congress and the newly established Procurement Board have decided to look deeper into the whys and wherefores of that World Bank board decision deferring consideration of the second tranche amounting to $232 million of the bank-funded National Road Improvement Program (NRIP).

People speak of the growing problem in hushed tones, respectful of cultural diversity. For some, the encounters are limited to the supermarket line where some South Koreans brusquely cut in as they do at the airport where police shrug in subservient deference.

In the bedroom of my apartment in Honolulu, I watched the Filipino Channel news coverage of the reported walkout of Sen. Antonio Trillanes IV and Brig. Gen. Danilo Lim from the court hearing in Makati.