Government to continue stimulus program

MANILA, Philippines – The government will continue to inject into the economy billions in stimulus funds possibly until 2012 to ensure the country’s full economic recovery, Acting Socioeconomic Planning Secretary Augusto Santos said yesterday.

“We are not exiting yet and we will continue with the stimulus package although at a reduced range,” Santos said, adding that by 2011, the government will decide if there is a need to continue stimulating the economy up to 2012.

He said that next year’s P1.5-trillion budget still took into account deficit spending which Santos said is necessary to maintain “social protection.”

The government expects the economy to grow anywhere from 2.6 percent to 3.6 percent next year and at a range of 0.8 percent to 1.8 percent this year.

Santos said that during the post-disaster needs assessment between the government and multilateral agencies early this month, it was estimated that total damage and losses left by typhoons Ondoy and Pepeng, amounted to P206 billion or 2.7 percent of gross domestic product (GDP).

“This would require deficit spending to bring lives and livelihood back to normal, including rehabilitation of infrastructure and relocation of families living in danger-prone areas,” Santos said.

The acting chief of the National Economic and Development Authority (NEDA) also said that pump-priming the economy allowed the government to escape recession.

“While our Asian neighbors contracted, the Philippines still posted gross domestic product (GDP) growth. Deficit spending has also allowed us to save jobs,” he said.

For 2010, the government has programmed a budget deficit of P233.4 billion but the interagency Development Budget Coordination Committee (DBCC) said this is still subject to review given the fragile economic recovery.

This year, the government expects the deficit to hit anywhere from P298 billion to P300 billion which is above the full-year ceiling of P250 billion, because of poor revenues from privatization. A P300-billion deficit is equivalent to 3.96 percent of GDP.

The government had expected revenues from privatization to hit P30 billion this year but to date, the sale of state-owned assets, mostly small real estate properties nationwide, reached only P1.1 billion. –Iris C. Gonzales (The Philippine Star)