RP DEEPLY COMMITTED TO FISCAL DISCIPLINE - GMA
TOKYO, JUNE 21, 2009 (STAR) By Paolo S. Romero - President Arroyo assured yesterday international financial community and credit rating agencies the Philippines is “deeply committed” to fiscal discipline as the government would stick to deficit benchmarks and will be “deliberate” in spending.
Mrs. Arroyo issued the statement as the Philippines is trying to negotiate better terms and conditions for either official development assistance (ODA) or “Samurai” bonds from Japanese banks to fund its deficit projected at P252 billion this year.
The government has reset is deficit target for 2009 at least four times from P40 billion due to the global recession. Before the global crisis broke out, economic managers said wiping out the deficit was possible last year.
“Let me say that even if we have had to postpone our balanced budget target, our international creditors, the rating agencies and the international financial community, business community agree that given the global economic crisis, that is tolerable, as long as we stay in bounds of fiscal discipline and that we are deliberate,” Mrs. Arroyo told Filipino and Japanese journalists here.
“So in determining how much to spend given our efforts in taxation, both administrative and legislative, we are very mindful of benchmarks such as the debt-to-GDP ratio, deficit-to-GDP ratio and so important is fiscal discipline so will be deeply committed to keeping fiscal discipline and investing in resiliency of economy as well as long term growth,” she said.
The current deficit target is 3.2 percent of the country’s gross domestic Product (GDP), way up from the initial target of less than two percent of GDP two years ago.
Socioeconomic Planning Secretary Ralph Recto, who accompanied Mrs. Arroyo in her four-day official visit here, told The STAR the ratio was within the rule of thumb standards of the International Monetary Fund and credit rating agencies.
Recto said assurances that the government would stick to known benchmarks “signals that we are fiscally responsible.”
Mrs. Arroyo said out the country is now in a better position to withstand external shocks compared to nine years ago because of better human and physical infrastructure.
She said her administration would continue to spend for the “economy, environment and education.
Finance Secretary Margarito Teves told reporters here on Friday the Philippines would tap more of the Japanese government’s multi-billion dollar “growth initiative” for developing countries in Asia to help sustain its growth and shore up its fiscal position.
Teves said the signing of the Memorandum of Understanding with the Japan Bank for International Cooperation (JBIC) yesterday for the latter to guarantee up to $1 billion worth of yen-denominated “Samurai” bonds was part of the government’s efforts to look for funding for its deficit and anti-poverty projects.
“There is a decision from the Japanese government to support more developing countries so we consider this an opportunity,” Teves said, referring to Japanese Prime Minister Taro Aso’s “Growth Initiative towards Doubling the Size of Asia’s Economy.”
Chief News Editor: Sol Jose Vanzi
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