IMF RAISES GROWTH TARGETS FOR RP ECONOMY / SENATE PASSES '08 BUDGET
MANILA, DECEMBER 12, 2007 (STAR) By Des Ferriols - The International Monetary Fund (IMF) said it expected the country’s economy to grow by 6.7 percent in 2007 and by 6 percent in 2008, raising its original projected growth rate from 6.3 percent and 5.8 percent, respectively.
Wrapping up its annual Article IV review yesterday, the IMF said it also expected the Arroyo administration to meet its fiscal deficit target for the year but officials warned that weak tax collection needs to be reversed.
IMF mission chief Il Houng Lee told a press conference that the country’s growth was helped by the increase in the government’s infrastructure spending and this momentum was likely to be sustained until 2008.
However, Lee said raising the investment rate was critical to sustaining a high medium-term growth rate.
“We knew that growth was picking up early on but once we got the second and third quarter data, we had indication that growth was maintained,” Lee said. “This already assumes certain decline in the 4th quarter.”
According to Lee, growth was led mainly by high consumption spending funded by remittances from overseas Filipinos and also by the increase in government capital spending on infrastructure.
“Next year we expect growth to slow down slightly but broadly the growth will be maintained in the first half,” he said.
According to him, the downside was the uncertainty in the global economy, which could also translate to a slowdown in the domestic market arising from weaker trade primarily with the US.
The IMF said the effects of global market volatility would lead to a slowdown in exports to developed economies and against this background, the growth projections for 2008 have been revised.
“Large foreign exchange inflows present opportunities to boost investment and growth, but they also create short-term challenges,” the IMF said, adding that on the back of strong OFW remittances, the peso had appreciated strongly.
However, the IMF said current policies have generally steered a path between maintaining external competitiveness, limiting risks of overheating, and preparing for their possible reversals.
The IMF said inflation rate in the Philippines, specifically, remained low and well-anchored despite earlier upward pressures while the pace of credit growth also slowed down.
The latest revision in the IMF’s growth projection, however, was still lower than its original projection early in the year when it said the GDP growth could go up to 7 percent in 2008.
“We are less concerned about the actual percentages than we are about the durability and sustainability of this growth momentum,” he said.
According to Lee, the IMF was pleased with the increase in the government’s infrastructure spending but financing the sustained increase in public capital spending would be critical.
He added that while privatization was useful in bridging the gap between tax revenues and the budget, it was by nature temporary.
“We hope to see more permanent measures to be put in place,” he said.
Senate passes P1.227-trillion budget for 2008 By Aurea Calica Wednesday, December 12, 2007
After three weeks of marathon deliberations, the Senate passed on final reading yesterday the proposed P1.227-trillion national budget for 2008, carrying a special provision to cut debt interest payments, including those on questionable loans by realigning them to social services.
All the 14 senators present voted to adopt the proposed budget, with the amendments agreed upon by the Senate finance committee led by Sen. Juan Ponce Enrile.
The Senate and the House of Representatives will now go on a bicameral conference to harmonize their versions of the general appropriations act for next year.
Senate President Manuel Villar Jr. said the budget was passed in “record-breaking time” because they conducted hearings on the proposed allotments for the different departments and agencies even before the House submitted its version to the Senate.
Villar also recommended putting a zero-peso budget for the Optical Media Board (OMB) for next year, citing the agency headed by actor and television host Edu Manzano was not effective in eradicating the problem of movie and software piracy in the country.
“Lackluster performance in solving piracy can be seen in our continued inclusion since 2001 in the International Watch List of countries violating intellectual property rights,” Villar said.
Villar added the proposal of zero budget for the OMB will be among the issues to be raised in the bicameral conference with the House.
He said the recommendation, once approved by Congress, would effectively abolish the OMB.
Villar recalled then Senate finance committee chairman Franklin Drilon recommended a one-peso budget for OMB over the repeated failure of Manzano to attend the budget hearings.
Manzano sent a low-ranking OMB intelligence agent to defend the board’s budget, earning him the ire of the senators who saw his absence as indifference to the needs of the agency.
Manzano is also currently locked in a verbal tussle with Sen. Ramon “Bong” Revilla Jr., who was defended by Enrile.
Enrile lashed out at Manzano for showing much disrespect to Revilla as a senator and who has the mandate to oversee the performance of the OMB, being the chairman of the Senate committee on public information and mass media and the congressional oversight on the OMB.
“For the record, Senator Revilla has made representations to me as chairman of the committee on finance to help augment the budget of OMB. I believe that he sincerely has the best interest of the film industry at heart,” Enrile said.
The Senate made revisions on the national budget by accepting the proposal of Sen. Panfilo Lacson that any savings generated by the government with the strengthening of the peso should be allocated for education and health projects.
In the national expenditure program submitted by Malacañang, the debt interest payments amounted to P295.751 billion. This was slashed by the House by around P17.8 billion, which was reduced to more than P5 billion by the Senate because it restored P12.1 billion of the slash made by the House.
Lacson said with the strengthening of the peso at a conservative estimate of P42 to a dollar, the government could save up to P11.5 billion from debt servicing.
“I would propose we restore the budget of the Department of Health, which was slashed by the Senate version by P4.192 billion,” he said.
“And the amount will be taken out of the savings generated by the appreciation of the peso, using a very conservative estimate of P42 to a dollar,” Lacson said.
Lacson stressed these funds would be important for the various health programs, such as the one to combat tuberculosis, which was cut by P720 million.
Lacson noted the budget for the Research Institute for Tropical Medicine was also reduced to a measly P30 million when they asked for P250 million.
“I’m not touching the P12 billion for the payment of bad loans,” Lacson added.
Enrile restored the House’s special provision in the 2008 budget suspending interest payments for questionable and fraudulent loans pending renegotiation or condonation.
The move was welcomed by the Freedom From Debt Coalition, saying this was a step in the right direction although the funds would still not be enough for essential services like health and education.
Sen. Benigno Aquino III, for his part, proposed to cut by P500 million Malacanang’s Kilos Asenso fund for local government amounting to P3 billion, which was also approved on the floor.
The slash will also be allotted for the health and education departments.
Enrile said all other amendments would be tackled at the bicameral conference committee.
Topping the list of recipients of the 2008 budget is the Department of Education with P138 billion, followed by the departments of Public Works and Highways with P90.72 billion and National Defense at P50.9 billion.
The Department of Agriculture has P26.8 billion; Department of Transportation and Communications, P19 billion; Department of Health, P16.5 billion; judiciary, P10.6 billion; and Department of Foreign Affairs, P10.18 billion.
Under the DepEd budget, P2 billion has been allotted for the repair of school buildings, P760 million to cover the backlog of classrooms, P420 million for school seats, and P330 million to hire new teachers.
An increase in the allocation for the prevention and control of infectious diseases under the DOH budget has also been provided.
The budget of the Office of the Solicitor General was also increased to P81 million for the implementation of reforms instituted by law in their structure and organization.
The Bureau of Jail Management and Penology received P557.033 million for the subsistence allowance of 78,306 prisoners at P60 per day, and P83.555 million medical allowance at P3 per day.
Chief News Editor: Sol Jose Vanzi
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