PALACE: IT WILL TAKE MORE TIME TO FEEL EFFECTS OF ECONOMIC GAINS
MANILA, SEPTEMBER 8, 2006 (STAR) By Aurea Calica - Hang in there just a little longer.
Malacañang admitted yesterday it would take some more time for ordinary Filipinos to feel the effects of the country’s economic gains as it welcomed the assessment of the Asian Development Bank (ADB), which raised the Philippines’ growth forecast for this year.
Press Secretary Ignacio Bunye said the favorable outlook of the ADB should be taken as a "collective testimony to sound political and economic stewardship in the hands of President Arroyo," along with the other positive gains the government had been achieving.
But Bunye also said "we also take note of concerns that these economic gains are not being felt at the optimum level by ordinary Filipinos."
"We urge the people to hold on for we assure them that lasting social payback is on the way," he added.
Bunye said the government would just have to stay the course in terms of political stability and economic growth and sustain the momentum of gains that should lead to more investments and jobs. He said the administration would also strive to put food on the tables of ordinary people, increase their purchasing power and give every community and household efficient and effective delivery of services.
President Arroyo has vowed to continue these economic reforms after imposing higher expanded value-added and other taxes.
She said the government will invest on infrastructure and projects that could generate investments and jobs as well as develop the country’s various regions based on their potentials.
Mrs. Arroyo said the country’s improved fiscal condition also allowed government to spend more on social services, especially education.
She said that while the remittances of the overseas Filipino workers greatly contributed to economic stability, the country’s growth was broad-based, with significant contributions being made by the services sector, agriculture and exports.
The ADB raised its growth forecast for the Philippines this year from a gross domestic product growth of five percent to 5.4 percent due mainly to improvements in agriculture and electronics exports.
The original five-percent growth forecast was made in the first semester of 2005 and was kept intact when the lending institution presented its new growth targets in April this year.
However, ADB chief economist Dr. Ifzal Ali said the Philippine government must establish an environment that attracts more investments and creates more jobs to ensure consistent growth.
"Debt burden is still high. Debt interest payment consumes more than a third of government income," Ali said.
He also said consumer spending had been solid, mainly fueled by strong inflows of remittances from overseas Filipino workers (OFWs) as well as migrant Filipinos.
First half remittances passing through the formal or banking sector were recorded in the $6-billion level, or well on track of the forecast $12-billion level for the entire year.
The end of the El Niño weather phenomenon resulted in a sharp increase in growth in the agriculture sector while a rebound in exports provided strong support. Merchandise exports rose 17 percent in the first half.
Ali also warned that there are still a host of "concerns" for the country despite the upward revision in GDP outlook.
Investment grew by 18.8 percent in 1999 but it has since slipped to just 17 percent last year. "It must be urgently addressed if the Philippines will march in a higher growth trajectory," he added.
Investments as a share of GDP fell and job creation remains well below the government’s annual target of five million new jobs.
A sustained improvement in the financial performance of government-owned or controlled corporations (GOCCs) and government financial institutions (GFIs) is necessary to preserve the gains in the public sector’s financial position.
The ADB said significant privatization of power sector assets at the "soonest possible time" would be a powerful catalyst for improving investor sentiment, both domestic and foreign.
Ali also said government must push public infrastructure investments in roads, ports, utilities with determination and must also attract private sector investments into these activities.
He also said there must be a level playing field for both foreign and domestic, as well as for small and big projects, in private sector-driven investments.
Ali lauded the improvements in tax revenue collections, but encouraged government towards intelligent expenditure especially those focused on social and physical infrastructure.
Chief News Editor: Sol Jose Vanzi
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