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HIGHER state spending aimed at cushioning the impact of skyrocketing
commodity prices is unlikely to bid up prices further, the Bangko
Sentral ng Pilipinas (BSP) said.
“I don’t think that would be inflationary.
In fact, that will add to absorptive capacity. Even [if] there’s
more spending on the consumption side than investment side, that
will increase growth without fueling inflation,” BSP Deputy Gov.
Diwa C. Guinigundo said, referring to the P93.6 billion in
additional funding support for the poor that the Arroyo
administration is setting aside.
The government last week announced that the
country’s economy as measured by its gross domestic product (GDP)
grew at slower pace of 5.2 percent in the first quarter even as
inflation hit a three-year high of 8.3 percent in April.
“The 5.2 percent for me is a healthy
adjustment on the part of the Philippine economy,” Guinigundo
said.
Finance Secretary Margarito B. Teves said the
government is prepared to provide P93.6 billion in additional
funding support for the poor as it expects additional revenues
amounting to P18.6 billion this year due to the higher-than-expected
oil prices. The government collects value-added tax on oil products.
President Arroyo has instructed that these
revenues be used to support poor families and the transport sector.
The P4 billion will be allocated as P2 billion
in cash transfers to the poor, P1 billion in scholarship grants and
interest-free loans to poor students, and P1 billion for demand-side
management programs like the conversion into energy-efficient light
bulbs and providing low interest loans to jeepney drivers who wish
to convert their engines into the cheaper and more
environment-friendly LPG-fired models.
“To fund the remaining P75-billion requirement
to support pro-poor and food production programs, the government may
tap additional official development assistance (ODA) loans,” Teves
said.
He earlier said that the higher level of
spending would likely result in a budget deficit of less than 1
percent of GDP this year to P75 billion.
Teves, however, said the government remains
committed to its revenue target of P1.24 trillion this year to
ensure that there are enough resources to support the programmed
expenditures.
-- Chino S. Leyco
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