PIA Press Release
Commentary: There is reason to be upbeat about the economy
by Carlo P. Canares
San Fernando City, La Union (26 October) -- When President Gloria Macapagal Arroyo appeared elated during a round table discussion in Malacanang the other day, she has every reason to be. In fact, she can't seem to be upbeat enough for some time now following news - almost daily - that, finally, the economy is on the upswing.
When the President breaks in the good news that "our economy is improving" she says so matter-of-factly, thanks to the tough decisions made by a strong Executive. When Mrs. Arroyo spoke of the economic turnaround that has seen the budget and spending somehow stabilized, she has tax legislations passed by Congress and approved by the Judiciary to support it.
When she declares her commitment to improve the lives of Filipinos through economic and social programs and infrastructure, she has the budget to get these going. And when she announces that the stock market closed at its highest, or net portfolio investments more than doubled, or other upbeat economic news, she does so with rising investor confidence in her administration.
Consider the following:
- Net foreign portfolio investments more than doubled to $373.3 million last month as against $131.5 million the month earlier as improving economic fundamentals bolstered investor confidence.
- The economy grew 5.5 percent year-on-year in the second quarter and that the government's budget surplus was P14.3 billion in August.
- The stock market closed at its highest finish on Monday in more than nine years.
- Consumer prices rose a steady 5.7 percent last month, the lowest since June 2004.
- The peso continues to win against the mighty dollar and has breached the 50 to the dollar barrier. As a result, government debt fell 1.9 percent at the end of July.
- Furthermore, the strong showing of the peso saved the country some P17 billion ($340M) in interest payments in the first 8 months. And the savings from the strong peso could be used to help replace infrastructure and uplift the lives of more Filipinos.
- The Central Bank will pay $460 million of its debts ahead of schedule. The loans, originally due April 2007 and April 2009, will be pre-paid this month. The country has a higher level of gross international reserves and the continuing foreign exchange inflows which has dramatically improved the external liquidity of the central bank.
- The Central Bank said the country had a balance of payments surplus of $2.62 billion for the first nine months of the year.
- The country posts a full-year budget deficit that is lower than the target of P125 billion, given the government's tight spending and improved revenue collection. This could help the government reduce its borrowings in 2007.
- Phase 2 of the country's economic turnaround plan of investing in infrastructure, health care and other priorities is covered by adequate funds. The super region development program that President Arroyo spelled out in her 2006 SONA can be sustained by strong revenue program and collection efforts up to 2010 and even beyond. Budget Secretary Rolando Andaya Jr. has declared that "we can say with confidence that the SONA investments requirements can be adequately addressed by the government, which has a total investment cost of P369.3 billion."
- The administration has alloted P1.7 trillion - equivalent to 4.45 percent of the country's economic production - for the infrastructure projects of the government. The President believes that infrastructure facilities are necessary to improve livelihood and uplift the lives of the average Filipino.
- The government has a budget amounting to P10.3 billion that would increase the salaries of more than one million state workers
- For the first time in years, a bigger chunk of the national budget is allocated for social programs rather than for interest payments.
- The international ratings firm Moody's Investors Service is expected to upgrade its outlook on the Philippines from "negative" to "stable" before year-end.
Indeed, the tough economic decisions and policies of the President who once said she is "stubbornly focused on the economy" is now bearing fruit as evidenced by the strong economic fundamentals. The government will ensure the flow down of macroeconomic gains to every Filipino. (PIA) [top]