FISCAL REFORMS STARTING TO IMPROVE ECONOMY - ARROYO
MANILA, January 26, 2005 (STAR) By Marichu Villanueva - A visibly elated President Arroyo said yesterday her fiscal reform program, which gained momentum when Congress passed two of her eight tax bills into law, has started to improve the country’s economic indicators.
She cited in particular the sustained increase in the value of the peso against the dollar and the bullish market in the Philippine Stock Exchange (PSE).
The President, an economist, credited her administration’s fiscal reform program for these major economic improvements in a brief speech yesterday after she signed into law the Lateral Attrition Act as Republic Act 9335, the second tax bill enacted out of eight revenue-generating measures she endorsed to Congress.
Mrs. Arroyo, with Senate President Franklin Drilon and Speaker Jose de Venecia Jr., signed copies of RA 9335 along with its principal authors and sponsors in Congress during a ceremony at Malacañang.
"I thank the economic community, local and international, for acknowledging our legislative-executive partnership for reform by putting their money where their mouth is," she said.
The President thanked the congressmen and senators because "the peso has been strengthening and the stock market has been rallying. While Asian stocks are sliding, Philippine stocks are showing strength."
She particularly referred to the PSE, where the 30-company composite index extended gains to fresh five-year highs breaching 2,000 points as investors bought into companies expected to announce strong results for 2004.
The peso, meanwhile, surged to its strongest finish in more than 12 months, closing at 55.40 to the dollar the other day on the back of positive economic outlook, strong dollar inflows from overseas Filipino contract workers and the general weakening of the dollar against regional currencies.
"The buoyancy in the economy, combined with the equitable revenue program and a strong fight against corruption, are setting the stage for a decisive turnaround that will bring in investments and jobs for the people," Mrs. Arroyo said.
Presidential Spokesman Ignacio Bunye sought to highlight these economic improvements over the government-run Radyo ng Bayan yesterday.
"The stock market is the barometer of business confidence, the barometer of investors’ confidence," he said. "The more active (the stock market) is, this means there are more participants and there are more who believe that the long-term prospects of the Philippines are bright."
Bunye said the bullish stock market is a "good signal" that means more investments in the Philippines, which will create new jobs and make the economy stronger.
"In the case of the peso, we are glad that it has been strengthening... we will need less pesos to pay for our imports and to pay our foreign debts," he said.
Bunye, however, admitted that much of the peso’s strength is from the foreign exchange remittances by overseas Filipino workers.
Lawmakers predicted that the positive economic outlook will continue as the market becomes more confident of the government’s moves to improve the economy.
Reps. Vincent Garcia of Davao City and Roseller Barinaga of Zamboanga del Norte said in a joint statement yesterday that the full swing of reforms, new taxes and upcoming changes in the President’s economic team will ensure better prospects for the economy.
Garcia, a member of the House committee on economic affairs, said the recent credit downgrade will not affect investors’ confidence since they are "impressed by the actual reforms and new taxes being implemented, which they will rely on in deciding to put their stake on the country."
He said the passage of the two tax measures shows that the legislature and the executive branch of government are serious in acting on urgent fiscal reforms.
Barinaga, chairman of the House committee on labor and employment, said the revamp of Mrs. Arroyo’s economic team will boost investor confidence as the President is expected to appoint better performers to her Cabinet.
"The President’s decisive action to revamp her economic team will put the country’s fiscal house in order. While outgoing members of her Cabinet and her economic team delivered well, this is not enough, based on (her) judgment. The President wants the highest standard of competence among her Cabinet members," he said.
Barinaga added that "the peso and stocks surge showed investors were unaffected by the resignation of Finance Secretary Juanita Amatong and by Standard & Poor’s rating downgrade."
He said any rating downgrade should not discourage lawmakers from pursuing the needed reform and revenue measures.
"The new high marks of the peso and stocks should challenge us more in Congress to continue with our hard work," Barinaga said.
Reported by: Sol Jose Vanzi
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