ADB believes RP can achieve balanced budget by 2003

DAVAO CITY -- The Asian Development Bank (ADB) supports government's assumption that the country will have a balanced budget by 2003.

In a press conference during the launching of the Partnership for Social and Economic Development for Mindanao, ADB senior economist Shiladitya Chatterjee said this projection (balanced budget by 2003) is doable."

However, Chatterjee pointed out that the government should try to work out ways to reduce the deficit every year.

"The government should improve their revenues. Efficiency in expenditure management should also be monitored," he said.

Aside from these, he said the government should see to it that implementation of the projects and major reforms are pushed.

"In the long-run, the government should balance the budget. To do this, the government has to improve revenue, push for efficiency of expenditures through better project, faster implementation of projects, no leakages, and good governance," he said.

According to Chatterjee, the possible increase in the budget deficit of up to P64 billion to P68 billion from earlier programmed P62.5 billion would not have a significant adverse impact on the economy.

He said though, that the country's economic managers should see to it that the funds to finance the deficit would be sourced from abroad and not from the domestic market to avoid "crowding out" of funds.

The ADB official said there are two factors that should be monitored by the fiscal managers. First is if the funds would be sourced domestically or in the international market.

Second factor, he said, is up to what extent the economic recovery will affect the domestic economy. "The government would be a major player in determining the impact of the economic recovery in the domestic front," he said.

Chatterjee, though, said they stick to their 3.8 percent growth target for the Philippines, a projection lower than government expectations of a four to five percent growth this year.

He said the factors affecting the growth such as agriculture, services and industrial have yet to show significant improvement.