Government set to revise economic targets

DAVAO CITY — The Development Budget Coordinating Committee is set to revise within this week the country’s growth targets for this year in the midst of fears the US economy would ultimately fall into recession.

The inter-agency body had pegged the growth target for this year at six to seven percent, even possibly replicating the 7.3-percent gross domestic product growth registered in 2007.

“The DBCC will have to meet soon, in a week or two, to review and we may have to possibly revise the different targets set for this year,” National Economic and Development Authority (NEDA) Director-General and Economic Planning Secretary Augusto Sanchez said during a recent economic briefing held here in Davao City.

Sanchez said the revision in the economic outlook shall be based on the latest world developments, including the feared slowdown or even recession of the US economy, the continuing increase in the oil prices as well as the exchange rate of the dollar to the peso.

A looming US recession is seen by economists to have a graver impact than the 1997 Asian economic crisis.

It is also expected to hit most countries, including the Philippines, that make the US as a major destination of their products.

A recession is defined as two consecutive quarters of negative growth and should the US end the first two quarters in recession, then the third quarter shall be hard on the job generation, remittances and even prices of basic commodities for Filipinos, economists said.

Sanchez said the DBCC shall keep track of such movements in the US economy and at the same time review the targets for the year in spite of earlier assurances the country’s economy has become resilient enough to weather such financial storms in the global market.

Finance Secretary Margarito Teves cited the need to monitor closely the assumptions set for this year in the light of the economic problems the US is experiencing.

Teves remained hopeful the fiscal sector, particularly the Bureau of Internal Revenue and the Bureau of Customs shall be able to meet their respective collection targets for 2008. “We are in a stronger position today to weather global economic volatility than in previous years.

Our efforts to exercise prudence in spending, improve tax collection, contain the deficit and exercise fiscal discipline are paying off. We are focused on building on this success to ensure a balanced budget this year,” Teves said in the same economic briefing held here at the Marco Polo Hotel.

Teves said despite the projected economic problems brought about by the possible US recession, the country remains confident it will be able to achieve a balanced budget in 2008 given the continuing downtrend in the fiscal deficit, from five percent in 2002 to 0.1 percent or P9.4 billion in 2007.

Budget and Management Secretary Rolando Andaya Jr. said the government’s 2008 expenditure program outline involves significant increases compared to last year in public spending nationwide, especially in infrastructure, education and healthcare.

“What we have to do for the first half of the year is spend and spend and spend on priority sectors. Infrastructure and social services will be the priority sectors for the government’s increasing capital spending.

We will continue to focus on reducing interest payments, reallocating resources to high-priority areas including ensuring timely delivery of funds to these important investments,” Andaya said.