Targets easier to meet this year, says Camacho

The government has better chances of achieving its macroeconomic targets this year with the expected faster recovery of the United States, Finance Secretary Jose Isidro Camacho disclosed yesterday.

Camacho, who attended the recent World Economic Forum, said global economic and market experts agree that the US is already on its way to economic recovery in the first half of the year, much earlier than the original projection of a turnaround in the second semester.

"There seems to be a consensus among participants in the forum that the US recovery is underway, happening earlier than expected and the downturn is shallower than projected. This should be good for our exports," Camacho said.

"This development should be favorable for the (Philippine) economy as our expectations of our own recovery are based on the US recovery," he added.

Socioeconomic Planning Secretary Dante Canlas had previously forecast this year’s gross domestic product (GDP) to grow at a clip of four to 4.5 percent.

The GDP measures the total output within the geographic boundaries of the country, regardless of the nationality of the entities producing the output.

Last year, the Philippines defied the global economic downtrend to post a 3.4 percent growth in its GDP.

This year, the country’s growth targets were based on assumptions that the US economic turnaround will start in the second semester.

"With the US recovery happening earlier than expected, we have better chances of meeting our own economic targets given the positive prognosis," Camacho said. He also cited other favorable developments that should spur economic growth this year.

This week, New York-based international credit rating agency Moody’s Investor Service upgraded the country’s credit rating outlook from negative to stable, citing the Arroyo administration’s efforts to consolidate its fiscal position while pushing economic growth.

"There are very clear signals that the potentials for the Philippines have improved, and I think the capital markets are applauding what we have been doing for the economy," Camacho said.

Bangko Sentral ng Pilipinas Deputy Governor Amando Tetangco Jr. said the piece of positive news "is going to improve investor confidence and that would lead to more interest in the Philippines" by foreign investors.

Moody’s noted "the reversal in the downward trend in the Bureau of Internal Revenue performance that played a key role in containing last year’s budget deficit very close to the targeted level, which was fairly ambitious for the new administration in view of the debilitating fiscal lgacy it inherited and the poor external environment it has faced."

For last year, the BIR’s total revenue collections totaled P563.732 billion which is P5.514 billion or 1.1 percent higher than programed. Of this, BIR collections at P388.679 billion, exceeded by P622 million the programmed target of P388.057 billion.

Last year’s budgetary shortfall of P147.023 billion exceeded the programmed level of P145 billion but this was still within acceptable levels, said Camacho.

The country’s credit ratings suffered under the previous administration when there was a runaway budget deficit of P136.1 billion, more than double the original target of P62.5 billion.

Moody’s said the Arroyo administration’s performance show it is capable of further reducing this year’s budget deficit to the targeted level of 3.3 percent of GDP if its administrative reform efforts are intensified and economic growth remains relatively decent.