(STAR) By Des Ferriols - The government has raised its economic growth targets for this year to reflect the impact of lower borrowing costs and inflation, and a stronger peso, Finance Secretary Margarito Teves said yesterday.

The government’s economic managers raised the target for gross domestic product (GDP) growth to a 6.1-percent to 6.7-percent range, Teves said. The original target was for 5.7-percent to 6.5-percent growth.

President Arroyo aims to accelerate the pace of economic growth from last year’s estimated 5.5-percent expansion as global oil prices drop and the government spends more on projects such as roads and ports to create more jobs and attract investors.

Crude oil futures for February delivery on the New York Mercantile Exchange touched $51.80 a barrel yesterday and are down 15 percent so far this year.

Still, spending may be curtailed because lawmakers have yet to agree on the government’s 2007 spending plan, Teves said.

The government raised its 2007 target for export growth to 11 percent from 10.5 percent, the finance secretary said.

The peso exchange rate is expected to average at 48 to 50 against the dollar this year compared with an earlier estimate of 51 to 53, Teves said.

Inflation is expected to average between 3.5 percent and four percent this year compared with an earlier estimate of 4.3 percent to 4.8 percent, he said.

Inflation averaged 6.2 percent last year after slowing to a nearly three-year low of 4.3 percent in December.

The estimate for the average yield on the 91-day Treasury bill (T-bill) yield was lowered to a range of four percent to 4.5 percent after the benchmark used by banks to price loans fell to a record early this week, Teves said. The previous estimate for the average benchmark rate was 5.5 percent to six percent.

The BSP is expecting the country’s gross international reserve to hit a record level of $24 billion this year, a sharp increase due to the strong dollar inflows from foreign investments and remittances from overseas Filipino workers (OFWs).

OFW remittances are expected to reach a record-high of $14 billion, up from the 2006 target of $13.4 billion.

On the other hand, the BSP said it expects the country’s balance of payments to hit $1.6 billion at the end of 2007, down from the original target of $2.8 billion.

According to the BSP, it is still expecting export income to grow in 2007 together with the continuing surge in remittances from OFWs.

The BSP said it opted for a more conservative BOP projection in the macro-economic assumptions to be used in 2007, saying that the country’s use of foreign exchange in 2007 would bring the BOP down to $1.648 billion.

Chief News Editor: Sol Jose Vanzi

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