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ASIAN Development Bank on Tuesday said the Philippine government
should push through balancing the budget this year despite recession
fears in the United States.
Thomas Crouch, ADB deputy director general for
Southeast Asia, told reporters that 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 told reporters at the
sidelines of the Energy Summit in Pasay City.
However, the ADB official expressed optimism
that the government could achieve a balance budget this year.
But Jose Salceda, the former economic adviser of
President Arroyo and also governor of Albay, earlier said that
balancing expenditures and income this year might be untimely as the
feared US recession will have short-term effects on the Philippine
economy.
Salceda said clusters that will be mainly
affected by a possible recession are the five million Filipino
workers in the US and the local real-estate sector.
“There are property companies that have
already reported … 50 percent cancellations in orders, and these
are not your small property, these are big listed companies,”
Salceda said in a telecast interview over ABS-CBN News Channel.
Major investors in the local real-estate sector,
he said, are the Filipino workers in the US.
Salceda added due to US economic slowdown, the
national government should postpone the balanced budget scenario
target this year and proceed with giving out tax rebates as what is
being done in the US to fuel its economy
“When it [the US] accelerates, we accelerate;
if it’s negative we’re negative … almost 1.7 times. Just get
the US economy, you multiple it by 1.7, that’s the Philippine GDP
[gross domestic product],” he said.
At end November, the government posted a budget
surplus of P12.6 billion from January to November last year of which
P90.6 billion came from privatization proceeds
The government plans to raise P1.108-trillion
worth of tax revenues this year or 10.5 percent more than last
year’s program of P1.003 trillion. The BIR is tasked to raise
P844.9 billion this year or 10.3 percent higher than last year’s
P765.9 billion while Customs is tasked to collect P254.5 billion, or
11.5 percent more than P228.2 billion.
The government intends to dispose of its
remaining shares in Philippine National Oil Company-Energy
Development Corp. and the Manila Electric Co., raising potential
privatization revenue this year to some P80 billion or 1.2 percent
of gross domestic product (GDP).
For next year, the government plans to dispose
of its 24-percent stake in food and beverage giant San Miguel Corp.
worth about P50 billion as well as its 10-percent interest in
Lopez-controlled Manila Electric Co. worth P10 billion.
Government assets that have been sold last year
include the government’s 46-percent stake in Philippine
Telecommunication Investments Corp. worth P25.2 billion, its
20-percent interest in PNOC-EDC worth P16.6 billion, the 60-hectare
old Iloilo airport in the town of Mandurriao worth P1.2 billion, and
the remaining 4.6 percent stake in Philippine National Bank worth
P998 million.
To complement the government’s revenue-raising
activities, Salceda has proposed a one-time P75-billion stimulus
plan to keep the economy afloat amid fears of global recession,
which President Arroyo approved on Tuesday.
Under approved package, the government will pay
P16-billion income tax relief to working families, P8-billion
electric discounts to households that consume less than 200
kilowatts per hour and P51-billion increase in government spending
for infrastructure and social services.
The template for Salceda’s proposal is the
stimulus plan of the US government.
“The effect of the US slowdown to the
Philippines will be ‘sharp and short’, and this is why I
proposed for a one-shot rebate,” Salceda said.
However, Victor Abola, University of Asia and
the Pacific professor, said there is no need for the Philippines to
implement a stimulus plan, adding the fears of US recession will
have a minimal effect the local scene.
“For me, it will be minimal and short,”
Abola reacting to Salceda’s recession effect forecast.
Meanwhile, the Bangko Sentral ng Pilipinas
Governor Amando M. Tetangco Jr. said the government has significant
amount of liquidity in the system that needs to be used, adding now
is the right time to think of structures that could use these
liquidities.
“That’s social policy, [but] if it is for
infrastructure, it’s good,” Tetangco said.
President Arroyo approved a P75-billion economic
stimulus package for the Philippines, which will be used to shield
the country from adverse effects of a slowdown in the United States
economy. (See full story on Page 1)
The government hopes to carry out the package by
March this year.
Despite the approval on the stimulus plan, the
government maintains its goal of balanced-budget this year.
Finance Secretary Margarito B. Teves also said
the government is still hopeful that a final tally will show a
balanced budget scenario for last year, with the agency seeing an
emerging final figure close to P9.1-billion deficit.
“The final outcome would be probably close to
the medium scenario,” Teves said.
-- Darwin G. Amojelar and Chino S. Leyco
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