BUDGET  DEFICIT  IN  JANUARY  DOWN  TO  Php15.4 BILLION

MANILA, March 7, 2006
 (MALAYA) PRESIDENT Arroyo yesterday said government’s actual budget deficit in January stands at P15.4 billion, which is P5.5 billion lower than the target of P20.9 billion.

Arroyo, in a roundtable discussion with economic managers, said government revenues also rose to P72.6 billion and savings from expenditures reached P2.7 billion in January.

Because of this, she said government can afford to raise its expenses for infrastructure and education. She said she ordered Budget Secretary Rolando Andaya Jr. to release P500 million in order to close the classroom gap.

Arroyo said the new deficit figures are additional reasons for investors to bring in more capital into the country. She said the stock market and the peso remain strong despite the destabilization attempts.

The President said the P2.7-billion savings is "a nice problem" because she has ordered the release of P35 billion to pump-prime the economy. "But that is a good problem compared to last year when we couldn’t find funds," she said.

Arroyo was at the Philippine Stock Exchange in Makati City Monday morning to ring the bell signaling the start of trading.

Finance Secretary Margarito Teves and Trade Secretary Peter Favila said it was a good sign to businessmen because it showed Arroyo in control of the situation.

Arroyo said the budget may be balanced by 2008, two years earlier than the earlier target of 2010, because the current deficit level is in accordance with the 2008 target.

Teves said the 2010 target does not include the expanded value added tax (EVAT) so that "maybe through the EVAT and other initiatives of the bureaus of Internal Revenue and Customs, we may close the gap earlier."

Customs Commissioner Napoleon Morales said Customs will achieve its full computerization program by 2010. BIR Commissioner Jose Mario Buñag said all revenue collection regions will be computerized by 2007. Teves said revenue collection effort is expected to reach 17 percent by 2010. – Regina Bengco

Peso breaches P50-level, highest in three years: report 03/07 10:52:16 AM

The local currency managed to breach the P50-level against the US dollar, the highest in three years.

According to media reports, the peso managed to climb past the P51-level to P50.94 on reports of the government had narrowed the budget deficit as well as strong inflows of dollars from Filipinos abroad.

It closed yesterday at P51.05 against the US dollar.

Analysts earlier said the peso was gaining more momentum as the market continued to relax after President Gloria Arroyo lifted Presidential Proclamation 1017 which put the entire country under a state of emergency.

Market players said there was also very little demand for dollars among the usual corporate dollar users and this, combined with the steady inflow of the greenback, supported the peso.

Socio-economic chief hopeful with lifting of state of emergency 03/07 11:39:52 AM

The lifting of the state of national emergency last week signals the country’s return to normalcy and enables government to focus on the economic reform agenda, according to Socioeconomic Planning Secretary Romulo L. Neri.

Neri said that as 2006 will be as challenging as 2005, there is a need to focus on increasing employment, increasing revenue collections, improving infrastructure, and rein in inflation.

He said among the challenges are high global oil prices due to tightness between supply and demand, effects of EVAT, large fiscal deficit, and high unemployment and underemployment rates that averaged 7.7 percent and 21.0 percent in 2005.

He noted that the recent experience showed the Philippine economy remains resilient despite the political challenges.

Except for temporary setbacks in reaction to the political unrest, Neri said that in the first quarter of the year, the stock exchange has been enjoying a bull run and business firms surveyed by the Bangko Sentral ng Pilipinas has been generally upbeat about the economy for the first two quarters of 2006.

The international credit rating agencies have also upgraded the country’s rating from negative to stable. The peso is also on a three-and-a-half year high.

The chief economic planner also noted that while political tensions peaked in the third quarter of 2005, gross national product (GNP) still grew by 7.0 percent in the fourth quarter of the same year.

Nrei said the resiliency of the economy can be partly explained by its globalization.

“The economy is more resilient to political stress because it is becoming more globalized. Foreign investors, for example, look at the fundamentals. What matters to them is profit, not the latest twists of the local political drama,” Neri said.

Neri said net foreign direct investment as of November 2005 amounted to US$ 1.1 billion, or 70 percent more than the same 11-month period in 2004.

The same pattern was seen in the stock market. Net foreign portfolio investments in 2005 amounted to US$ 2.1 billion, or more than four times the level seen in 2004.

He explained that the globalized sectors of the economy are in turn feeding booms in other sectors.

“Because of massive OFW inflows, banking grew by 21.3 percent in 2005. Because of office space demand by the call centers, real estate grew by 13.5 percent. Because of the rush of investors, mining grew by 9.3 percent, even hitting 24.8 percent in the fourth quarter,” he said.

He pointed out that exports have begun to rebound from the 3.9 percent growth in 2005. Last December, merchandise exports rose by 16.8 percent. The outlook for export growth in 2006 is 10 percent, due to upswings in electronics, electrical machinery, furniture, and even garments.

According to Neri, the outsourcing industry, which includes call centers, is also booming. For this year, revenues are seen to rise by 52 percent compared with 2005. There are now 105 call center locators.

Additionally, Neri said that there are sectors that will post robust growth on their own, neither dismayed by politics nor fueled by globalization.

“La Niña is far less damaging than last year’s El Niño drought, so agriculture may recover,” he added.

Neri emphasized that public construction will also surge this year. “As seen in the proposed budget for 2006, public spending on infrastructure will rise by at least 28 percent,” he said.

He added that telecommunications will continue to set the pace for services. “Growth in the communications sector was 14.8 percent in 2005 and will expand briskly due to greater competition from Voice over Internet Protocol (VoIP) technology.”


Chief News Editor: Sol Jose Vanzi

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