(STAR)  The country’s economy is at a “tipping point,” President Arroyo said yesterday as she expressed confidence it would strengthen further this year.

Speaking at an economic briefing at the Shangri-La Hotel in Makati City, the President described 2007 as the best year for the Philippine economy in over 30 years, with the country posting a 7.3 percent average growth rate and the peso the best performing currency in the region.

“The foundation of our economic renaissance on a vision for our nation includes strong global engagement, tough economic reforms, and huge investments in people and infrastructure,” she said.

Mrs. Arroyo noted that big investors continue to come to the country, while one million new jobs were again created last year, contributing to the decline in unemployment and poverty rates.

“We’re continuing the pace of progress that has made our economy so strong. This maturity in our economy has brought a new confidence that forms the foundation of sustained economic growth moving forward. We are at a tipping point and I’m confident that the Philippines will tip forward.

“Our day in the sun will come if we redouble our efforts to achieve a moral transformation, social justice and economic equality,” she added.

The President said the Philippines is on a path of sustained economic growth and that in 20 years, the country would be among First World countries.

But she said that in the short-term, external pressures continue to hound the country, particularly the expected short but sharp slowdown of the United States economy.

In response to the slowdown, the President has ordered a surge in investments in infrastructure, for which P200 billion was allocated.

“We are frontloading our budget so that during this period of short though sharp slowdown of the economy, we would be having a surge in our own infrastructure and social services spending,” she said.

“P200-billion budget for infrastructure covering the national government, government corporations and financial institutions and the local government units, and so we are frontloading as much of that as we can to pump prime the economy,” she added.

Among the items in the spending surge program of the President are the P4 billion additional funding for low-cost housing and a 10-fold increase in the conditional cash transfer program of the government for poor families.

The decision to focus on infrastructure spending as a firewall against the US slowdown was made in response to the rejection by the President’s economic managers of the P75-billion economic stimulus package proposed by Albay Gov. Joey Salceda, an economic adviser of Mrs. Arroyo.

Unlike the stimulus package, which would require the passage of a supplemental budget as proposed, the funds needed for the infrastructure surge are already covered by the 2008 budget. – Marvin Sy

GMA favors strong peso
By Des Ferriols Saturday, February 16, 2008

President Arroyo told businessmen and analysts yesterday that the the government could do little to curb the appreciation of the peso against the dollar, stressing that the exchange rate would remain market-determined.

Speaking before yesterday’s annual economic briefing, President Arroyo said exporters would have to improve their competitive edge in terms of production efficiency instead of depending on fluctuations in the exchange rate.

According to Mrs. Arroyo, the government is ready to take an extra step for overseas Filipino workers (OFWs) since they have no means of offsetting losses due to foreign exchange fluctuations.

“We are confident that the export sector is competitive enough but it is the OFW sector that we must make special effort to assist,” Mrs. Arroyo told the assembled businessmen that include leaders and representatives of the export sector.

According to Mrs. Arroyo, the exchange rate policy was also up to the Bangko Sentral ng Pilipinas (BSP). “Our central bank is world class and it is an independent institution,” she said.

BSP Governor Amando M. Tetangco Jr., for his part, said the BSP expects the peso to remain firm.

Tetangco admitted that the BSP could take only indirect measures that would relieve some of the pressure on the peso.

Sharing a panel discussion with President Arroyo, Tetangco reiterated the BSP’s policy of leaving the exchange rate up to market forces. “We will continue to work within the framework of the market,” he said.

According to Tetangco, the BSP has liberalized foreign exchange outflow to ease some of the pressure on the peso by allowing easier outward investments.

“We maintain some scope for occasional action to smoothen volatility but that is as far as our mandate allows,” Tetangco said.

Tetangco said the BSP would ease forex outflows even further by lifting the remaining restrictions particularly in the area of registration and documentary requirements.

Chief News Editor: Sol Jose Vanzi

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