ADB SEES RP ECO GROWTH OF 5%; 39.4% OF PINOYS LIVE BELOW POVERTY LEVEL
MANILA, April 29, 2004 (STAR) By Ted P. Torres - The Philippines is expected to enjoy a five percent economic growth in both 2004 and 2005 due to higher consumer spending, improved weather conditions and improved overseas demand, particularly for electronics, the Asian Development Bank (ADB) said yesterday.
The economy expanded by 4.5 percent in 2003.
The ADB, however, warned the fiscal situation remained the country’s main variable with the government facing a "very difficult" task of keeping the budget deficit at 4.2 percent of gross domestic product (GDP) this year.
"Fiscal issues are key to our outlook," ADB assistant chief economist Jean-Peirre Verbiest said yesterday.
Verbiest also said the economy must be able to grow faster, by at least six percent for the next 10 years, for the Philippines "to start making significant inroads in poverty."
According to official figures, 39.4 percent of Filipinos live below the poverty line of $1 a day.
The ADB said low tax collection, slow investments and ballooning debts were hampering growth.
"The investment problem of the Philippines is a problem of many years," ADB economist Jesus Felipe said. "The poor infrastructure of the country is not just due to lack of investments last year. It’s a lack of investments of many years, many decades. In that sense, it is related to budget deficit."
Verbiest noted that debt servicing takes up most of the expenditures, including those that should be allotted to improve infrastructure.
"You have to first service your debts before you can put P1 in infrastructure," he told reporters. "That debt has to decrease and to decrease it, you will have to raise revenue. There is no other alternative."
The ADB estimates the Philippines’ total debt at $100 billion.
Verbiest said whoever wins the May 10 presidential elections must improve the fiscal situation.
President Gloria Macapagal Arroyo, a favorite of the middle and upper classes and business people, has been campaigning on promises of economic reform and uprooting poverty with more jobs and investment. Recent polls show Mrs. Arroyo leading over her rival, movie actor Fernando Poe Jr., a political neophyte whose candidacy has upset the business community.
Reported by: Sol Jose Vanzi
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