MALACAÑANG SAYS NO NEED TO CHANGE ECONOMIC POLICIES
MANILA, JULY 7, 2008 (STAR) By Paolo Romero - Malacañang said yesterday there was no need to change the administration’s economic policies amid soaring prices of fuel and basic commodities as the policies are under constant review.
Deputy Presidential Spokeswoman Lorelei Fajardo issued the statement after Sen. Manuel Roxas II urged the government to review its economic policies to enable the country to effectively address rising oil prices and accelerating inflation.
“The government should stop piggybacking on the people’s pain due to all-time high prices of fuel and food, and instead should review its spending program and prioritize funding for food security and relief,” Roxas said.
He reiterated that the Arroyo administration cannot simply shrug its shoulders while the average Filipino suffers the consequences of the increasing prices of oil and the impact of the 14-year high inflation rate of 11.4 percent.
“The Senate call is already a day-to-day activity of the President’s economic managers,” Fajardo said. “The President, together with her economic managers, constantly monitors and reviews our economic fundamentals to ensure proper fiscal management and economic direction.”
Roxas proposed adopting the four-day workweek, except for the frontline, health and security services of the government.
He said new measures should also include “reallocating money from unproductive foreign trips to much-needed relief measures, such as conditional cash transfers to affected workers, food-for-work public works programs or a genuine food-for-school program.”
He said the Arroyo administration should not blame external factors for the current crises.
“That is already a given. Yet throughout the world, responsible governments are taking the lead in setting good examples and helping their constituents cope with high prices,” Roxas said.
Sen. Loren Legarda, for her part, said the government should be more sensitive to the needs of the people as the fuel and food price crises worsen.
“Their interest should remain primordial. Long-term panacea of protecting them from economic shocks should be in place aside from palliatives intended to cushion the negative effects of inflation,” Legarda said.
Roxas and Legarda reiterated their call to scrap the value added tax (VAT) on oil, even temporarily.
Fajardo, however, said scrapping the VAT was not on Mrs. Arroyo’s mind because it would seriously affect the government’s revenue and expenditure program.
“The cure (scrapping the VAT) is worse than the ailment,” she said.
“Congress, particularly the Senate, should work with the Executive branch to find other ways to bring relief to our people from the growing world fuel price problem,” Fajardo said.
She said calling for the scrapping of VAT “may be good publicity” but what is needed is action.
“The government is doing exactly that, action speaks louder than words,” she said.
But Roxas sees a different scenario.
Because present times call for different priorities, he said the government, in consultation with the people, must review the budget and reallocate non-priority spending to fund urgent needs, particularly food security.
“The situation is very different now, the government should not be in ‘business as usual’ mode. The situation must be addressed immediately. The government must show it is not insensitive,” Roxas said.
“It would be too close-minded, or narrow-minded, or insensitive of the government if it refuses to change its previous decisions even if the situation is much, much different. It must accept that times have changed drastically.”
“We should realign the budget to address the short, medium and long-term needs of our people and of the economy,” he said, noting that there really are excesses in government spending.
Roxas said rice self-sufficiency is of utmost importance at this time, to ensure affordability and supply of food for the people.
“If prices of other goods increase, if our people are able to eat, the situation would be bearable,” the senator said.
Roxas, chairman of the Senate Committee on Trade and Commerce, again called for a stop to the collection of the 12-percent value-added tax on oil products at this time of crisis, which adds burden to the people.
He said the VAT on oil should be removed or suspended to give immediate relief to consumers.
“While those in the Middle East may have committed wrongdoings by unduly making their oil expensive, the government is part of the mischief because they are piggybacking on it, they’re adding to the cost of expensive oil,” Roxas said.
Last Saturday, Roxas said the government must prepare a plan to meet the relentless assault of high fuel prices on the people’s purchasing power and livelihood.
He attributed the 14-year-high inflation rate the country is currently experiencing not on the “overheating” of internal economic activity but on the adverse effects of global oil and rice price shocks.
Legarda said the skyrocketing prices of food and fuel had undoubtedly caused the inflation rate to leapfrog to double-digit levels. She noted though this was not surprising since the Philippines “is the world’s biggest importer of rice” and highly dependent on imported oil.
She said the government should increase investments in technology to help the country become less dependent on imported oil.
She said investments in agriculture should be harnessed to help increase local rice production at lower costs.
Legarda added these two proposals would in effect address two of the root causes of inflation.
Government expects P10.5-B additional revenues due to inflation By Iris C. Gonzales Monday, July 7, 2008
The government expects at least P10.5 billion in additional revenues this year as a result of soaring inflation in the country, computations from the Department of Finance showed.
Data showed that while the rise in prices has severely cut the purchasing power of consumers, every one percentage point increase in the projected inflation rate would translate to additional revenues of P10.5 billion.
This would mean a decrease in the government’s deficit level. On the other hand, a one percentage point decline in the projected inflation rate would mean a decline of P10.5 billion.
The government’s official 2008 inflation target is three to five percent but the central bank expects the average inflation rate to hit seven to nine percent this year. The average inflation rate has hit 7.6 percent as of end-June.
Inflation, or the rise in prices of consumer goods, rose to 11.4 percent in June, above the 9.6 percent in May and the 8.3 percent recorded in April, according to the latest data from the National Statistics Office. The increase is due to skyrocketing oil prices.
This early, the National Government expects a narrower-than-programmed budget deficit in the first half of the year partly due to higher-than-expected inflation.
The finance department has a programmed deficit in the first half of the year of P41 billion.
As of end-May, the government was able to contain the budget deficit at P18.8 billion as total revenues for the period amounted to P482.4 billion and expenditures stood at P501.2 billion. This is better than the P41.8-billion deficit posted in the same period last year.
Of the total revenues, the Bureau of Internal Revenue (BIR) collected P335.7 billion, up 17.5 percent year-on-year from the P285.6 billion recorded in the same period last year while Bureau of Customs (BOC) revenues increased by 22.9 percent to P92.1 billion from P72 billion collected in the same period last year.
In May alone, the government posted a budget surplus of P7 billion, its highest May surplus since 1986, due largely to an improvement in tax collection and lower spending. This is marked turnaround from the P1.7-billion deficit posted in the same month last year.
Total revenues rose to P106.9 billion in May or 13.5 percent higher than the P94.1 billion recorded during the same month last year while expenditures reached P99.9 billion, up by 4.1 percent from P95.9 billion recorded a year ago.
Of the total revenues, the BIR collected P77.7 billion, up 16.5 percent from the P66.7 billion collected in the same period last year. The BOC generated P21.5 billion in revenues, up by 22.8 percent from the P17.5 billion recorded a year ago.
However, despite the expected additional revenues from inflation, this is also expected to drastically cut the country’s economic growth this year.
The government expects GDP growth to slow this year to 5.7 percent to 6.5 percent from a previous forecast of 6.3 percent to seven percent.
Chief News Editor: Sol Jose Vanzi
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