Govt not giving up on balancing the budget, sets eyes on 2013

DAVAO CITY – Malacanang has resurrected its ambitious target to balance the budget, originally set to 2010 if not for the global financial crisis that needed capital infusion into the economy, and the Department of Finance said it was setting its eyes on 2013, and getting at par with the developed economies in Southeast Asia by 2016.

“But it would also depend on the superiors of the next administration,” Finance Underscretary Gil Beltran, in a briefing with news reporters on December 17 at the Marco Polo Hotel here.

“We are looking at 2013 to balance the budget,” Beltran said, saying that at prevailing performance of the economic indicators would indicate that by 2012, “we would be growing at five to six percent”.

He said that the external debt situation and the poverty ratio that declined slightly, for instance, would not affect the roll onto a balance budget by 2013, saying that the current economic performance would carry much of the needed boost toward the objective and that many of the economic reform and development requirements would be addressed by financing of the Millennium Challenge Corp. (MCC).

Beltran said that the MCC would finance about $500 million of the development projects of the country. The announcement came despite the country's failure to pass the anti-corruption test of the MCC. The MCC measures the policy performance of 93 developing countries that are candidates for grant assistance from the US government’s Millennium Challenge Account (MCA). The Philippines passed only five of the 17 indicators that the MCC examines.

The MCC is a US government corporation designed to work with developing countries, based on the principle that aid is most effective when it reinforces sound political, economic and social policies that promote poverty reduction through economic growth.

In addressing poverty, Beltran said that this would be largely addressed by the big amount allocated to microfinancing, which stood at P6 billion, of which only half was availed. “We still have P3 billion more for this financing.”

A primer released by the government's Investor Relations Office (IRO), showed that the country's economy “continues its growth story as the government's Economic Resiliency Plan (ERP) paired with economic, fiscal and financial reforms continue to deliver positive results”.

“The Philippines is among the few economies in the Asian region that escaped recession even at the height of the global financial crisis,” the primer said, which stressed on the economy's success in posting “uninterrupted growth” for the succeeding 35 quarters since 2001.

The gross domestic product has continued posting positive growth of 0.8 percent in the third quarter thi syear, from 4.6 percent in the same quarter last year. Growth benefitted from the positive performance from finance, private and government services, and the trade sub-sector on the supply side. On the expenditure side, the IRO said that the growth was contributed by government consumption and public construction.

The gross national product grew by 3.5 percent in the third quarter, propped by the increase by 26 percent in the net factor income from abroad.

Foreign remittances by overseas Filipinos reached $12.8 billion as of the end of September, with an increase of 8.6 percent annually.

Foreign direct investment also recorded a net inflow of $1.3 billion in the first eight months, despite the global recession. The number this year represented 35 percent increase compared to the figure last year of only $977 million.

Inflation was also kept low at 1.6 percent on year-on-year basis by end of the October this year. It was 0.7 percent in September, with an increase noted in the aftermath of the devastating typhoons in the third quarter.

Yet, gross international reserve already stood at $43.2 billion, enough to sustain eight months of imports of goods and payments of services and income.

Beltran said that debt payments was also slashed by P10 billion due to smaller interest payments. It stood at P340.8 billion for this year.

“We would expect it to be getting smaller until 2016 when we would hope to be at par already with our developed neighbors in Southeast Asia,” he said.