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By Chino S. Leyco, Reporter
COMPLACENCY, not a possible US recession, is the
biggest threat for the Philippine economy, according to the
Institute of International Finance (IIF).
Greg Fager, IIF Asia-Pacific director, said its
recent economic expansion would allow the Philippines to weather a
slowdown in the US. The world’s global association of financial
institutions expects the Philippines will sustain its growth
momentum this year.
In its outlook, the IIF projects that the
Philippine economy, as measured by the country’s gross domestic
product (GDP), will grow 6.5 percent this year, or slower than last
year’s record 7.3 percent expansion.
An IIF team is in Manila to assess the
country’s macroeconomic, fiscal and investment conditions.
Despite global economic uncertainties, the
country’s economic managers have maintained that the Philippines
would grow albeit at a slower 6.3 percent to 7 percent this year
given an expected slowdown in its largest export market, the US.
“What we are saying is that if there is a
recession in the US, then that will affect us. But the situation is
closely being monitored,” Acting Socioeconomic Planning Secretary
Augusto Santos had said.
The Department of Finance had warned against
pursuing an economic stimulus plan, similar to what the US
government is implementing, as raising expenditures would mean
putting off the Philippines’ objective of balancing its budget
this year.
As it is, the government’s main
revenue-generating agencies, the Bureaus of Internal Revenue and of
Customs, had warned they would be hard-pressed meeting this year’s
collection targets, which are crucial to bridging the government’s
fiscal gap. Raising public expenditures therefore would risk
widening again the budget deficit.
“What face we will show to the world [if the
budget were not balanced]. We have yet [to] get an upgrade from
rating firms,” Finance Undersecretary Gil S. Beltran said,
referring to the stimulus plan broached by one of President
Arroyo’s advisers.
Such a stimulus plan would go against policy
initiatives the Arroyo government has undertaken so far to balance
its budget, including raising taxes, trimming debt, and reducing tax
breaks that businesses enjoy.
Thomas Crouch, Asia Development Bank deputy
director general for Southeast Asia, also said deferring the plan to
balance the budget in 2008 would put the credibility of the
country’s economic managers under the cloud.
“The objective has been to balance the budget
by 2008. I think the market might become a little bit more nervous
if it wasn’t to be achieved,” Crouch said.
Last week, the US Congress overwhelmingly
approved an economic stimulus plan sought by the White House amid
mounting fears that the world’s biggest economy could be sliding
into a recession.
President George W. Bush hailed the package amid
a worsening housing market downturn and a dramatic slowdown in US
growth. The plan is valued at around $150 billion and crammed with
temporary tax rebates and fiscal incentives for business.
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