Cabinet told to refocus on economic recovery

President Arroyo ordered the Cabinet yesterday to "refocus" the government’s attention to bringing the country’s economy back on track.

During yesterday’s Cabinet meeting at Malacañang, Mrs. Arroyo laid out her plan for more government programs to allow small and medium enterprises more access to loans.

Mrs. Arroyo also wanted the government to generate additional income, create more jobs and livelihhod, and adopt other measures to reinvogorate the economy.

After the Cabinet meeting, Press Secretary Ignacio Bunye presented Finance Secretary Jose Isidro Camacho and Trade and Industry Secretary Manuel Roxas II to explain that the country’s economy is "fundamentally sound" despite fears being raised by "certain quarters" in the business community.

Camacho said there should be "no cause for concern" on the P133-billion budgetary deficit which the Arroyo administration faced during the first seven months of the year.

"Our economy is fundamentally sound," he said. "But we also would like to advise our business community that we should always take everything in context and don’t allow a culture of fear to consume us because it would be self-fulfilling."

On the other hand, Roxas said Mrs. Arroyo’s declaration will show businessmen that she has not lost focus of the country’s goal for an economic recovery.

"I think it’s always good for the President to convey to the public at large that economics is utmost among her many priorities although the concerns about the economy are always continuing," he said.

"And so I think the President simply wants to signal is that although she is very much focused on security and peace and order over the past several weeks, that economic matters were not very far from her mind and she is simply reallocating again her attention towards economic matters."

Roxas said Mrs. Arroyo and the Cabinet discussed livelihood, jobs and income generation nationwide through the continued promotion of small and medium enterprises.

"And all variety of activities and initiatives were discussed and assignments were handed out and some of these intiatives involved access to affordable credit, the access to markets, ensuring a healthy domestic economy and infrastructures for the linkages so that the products and services are available in the countryside can come to urban centers," he said.

Camacho said the 4.5 percent growth in the country’s gross domestic product (GDP) for the second quarter of this year was higher than the government’s projection.

"The country’s balance of payments, exports minus imports, were at at very, very healthy positive numbers," he said. "The only fly in the ointment, so to speak, as far as our economic scenarios are concerned, is on the budget deficit."

Camacho said Mrs. Arroyo and the Cabinet decided that the government’s fiscal targeting would reflect the deficit as a percentage of GDP.

"The fact that the concern about the budget deficit seems to be blown out of proportion," he said. "It is but one aspect of our economy, and the rest of the economy is doing very well."

Camacho said next year, the government has set the deficit to 3.3 percent to the GDP ratio.

"This is an important policy change," he said. "It is practiced by countries around us. It is also a policy objective to achieve both economic growth and fiscal discipline at the same time without being necessarily sacrificed for the other."

Camacho said the Arroyo administration has taken measures to narrow down the budgetary deficit through "pre-funding" or new borrowings from local and foreign sources.

"Because of the pre-funding we were able to do at the beginning of this year, this allows our Bureau of Treasury to have a lot of flexibility and have a healthy cash position," he said.

The Philippines does not face the "vulnerabilities" of other debt-stricken countries in Latin America, Camacho added.