MANILA, October 25, 2003  (MALAYA) By REGINA BENGCO and MARILOU JUMILLA - What are friends for?

The US embassy has agreed to review its Philippine economic outlook for 2003 after President Arroyo complained that the report grossly erred in saying her administration has failed to make inroads in poverty alleviation and fighting corruption.

"It is under review. If the assessment calls for a revision then it will be revised," Karen Kelly, embassy spokesman, said.

Ricardo Saludo, deputy presidential spokesman, said an embassy official informed the Palace the revision was expected to be posted yesterday or today on the embassy website.

Saludo said the Palace did not lodge a formal complaint but the embassy probably realized that the Arroyo administration has many achievements in its anti-poverty and anti-corruption campaigns.

Saludo sought to preempt speculations Malacaņang had unofficially complained to the State department.

Saludo said, "The only involvement of the Washington staff is to upload the revised report into the embassy website once it is done."

The 12-page report was posted on the embassy website (manila.usembassy.gov) on Tuesday, three days after the state visit of US President George W. Bush.

Kelly said the embassy report is semestral, but "but for some reason it wasn't updated until this October."

The report said that in spite of the economy's resilience in the first six months of 2003, prospects for a markedly higher economic growth over the next year are "not bright."

"Challenges are daunting and prospects for the Macapagal-Arroyo admi-nistration to make significant economic headway are limited," it added.

"With just months left in her truncated term, the President has not made significant inroads in poverty alleviation or combating corruption," the report said.

"In addition to the vulnerable fiscal situation and a worrisome contingent-liability problem, potential foreign investors, tourists, and others continue to be concerned about law and order, inadequate infrastructure, and corruption," it added.

The report said the Philippines continues to struggle with an unpredictable legal and regulatory environ-ment, as well as low competitiveness and high corruption rankings.

"Political developments since July, including the escape of Al-Qaeda-linked terrorists, a military mutiny, a court case against the Governor of the Central Bank, and allegations of corruption against the President's spouse have added to the air of uncertainty - overshadowing economic gains and accomplishments," it said.

Although the administration has made significant steps in addressing a worrisome fiscal trend and has attained some other success, the embassy said, it "has not made sufficient progress to break the pattern of low per-capita growth."

The embassy said the Arroyo administration's woes could be attributed to her lack of an electoral mandate, a global economic slowdown and weakening exports, law and order problems, and a high population growth rate.

Arroyo, in a forum sponsored by the Foreign Correspondents Association of the Philippines, said surveys show that the percentage of Filipinos who feel that they are not better off compared to several years ago is getting smaller.

She said it is, in fact, a blessing that less Filipinos are becoming despondent despite the 1997 Asian crisis, the Estrada impeachment trial, the 2001 information technology bubble, the Sept. 11, 2001 terrorist attacks and the continuing division in society.

Reported by: Sol Jose Vanzi

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