President Gloria Macapagal-Arroyo and her economic team are all ready with an action plan to insulate the Philippines from the volatile global economic crisis aggravated by the U.S. financial turmoil.
Finance Secretary Margarito Teves said the positive development last week on the $700-billion bailout deal for the US financial services, with the US Senate voting 74-25 in favor of the measure, “improved chances of recession not taking place.''
Teves said the success or failure of the proposed US bailout measure has an important real and psychological effect on economies.
He expressed optimism that the success of the bailout bill will definitely improve chances of recession not taking place although he said slowing down of global economies will still be there.
However, Teves said the economic growth of 7.3 percent last year is not possible this year, nor next year, given the present global economic scenario; even as he remains optimistic that with the action plan in place, the scaled-down growth targets are realizable.
To help address the effects of this global economic turmoil caused by the US credit crisis, Teves urged Congress to pass three pending bills -- the 2009 General Appropriations bill, the Rationalization of Fiscal Incentives bill, and the Rationalization of Sin Taxes bill.
On the other hand, socio-economic Planning Secretary Ralph Recto stressed the need to increase infrastructure spending and to increase investments in agriculture.
Recto also said that the challenge the economic managers face now is how to reduce inflation and to spend for sustainable growth in the future through increased government spending on infrastructure and agriculture productivity.
For his part, Budget Secretary Rolando Andaya Jr. said the proposed 2009 national capital layout ''focuses on infrastructure'' as he stressed that the proposed 2009 national government budget has the ''embedded solution to the problem,'' with infrastructure allocation proposed to be increased by 20 percent, and agriculture, by 50 percent.
Andaya stressed that there is no need to revise the proposed 2009 budget as this was ''crafted in anticipation of this particular problem.''
Bangko Sentral Deputy Governor Nestor Espenilla said there is a need to ''work on tax administration measures'' to generate more revenues as he stressed that there will be no new taxes.
The economic managers said the Philippines is an emerging economy that can be adversely affected by the fate of the new $700-billion bailout package deal for the US financial services sector.
Thus, the President's economic team had scaled down their growth targets for this year and next year to be ''realistic, credible and transparent'' given the present scenario in the global economy.
From the revised 2008 growth target of between 5.5 and 6.4 percent, the economic team now sees the economy growing by 4.4 to 4.9 percent this year.
For next year, a growth of 4.1 to 5.1 percent is expected.
