Economic team sets dream 8% growth goal

As in her mother, former President Corazon Aquino’s administration, President Aquino had resorted to dream targeting for the economy.

The economic team of Aquino raised his administration’s economic growth target for this year of up to six percent this year and eight percent next year that would be a 35-year high if met while projecting the budget deficit to drop to two percent of gross domestic product (GDP) in 2013 from this year’s P325 billion or 3.9 percent of GDP.

Finance Secretary Cesar Purisima said late Friday after a meeting of Aquino’s economic officials the worrisome fiscal gap would fall to 3.3 percent next year, 2.6 percent in 2012 and 2 percent by 2013. He said the government will continue to sell off more assets to raise money to support the expansion.

“We agreed we should set an ambitious target,” Purisima told reporters.

“We cannot afford to continue targeting low levels because we will continue to lag behind our neighbors, not be able to fight poverty and not attract more investments,” Purisima said.

Aquino’s predecessor Gloria Arroyo had set a growth target for this year of between 2.6 and 3.6 percent after a weak 1.1 percent expansion in 2009 and a strong 7.3 percent growth rate in the first three months of 2010.

The government’s new deficit target would be equivalent to 3.3 percent of GDP and will remain at that level in 2011 and 2.6 percent in 2012, Purisima said.

More funds would be devoted to social services, including cash transfers to the poor that are conditioned on their helping the government meet development targets, such as keeping their children in school.

More school buildings would

also be built while health insurance by the government would be offered to more Filipinos, Purisima said.

Further ahead, Budget Secretary Florencio Abad said the government would trim the budget deficit target to two percent of GDP between 2013 and 2016.

“We will look at ways to accelerate private-public partnership so that we can bridge the gap in investments,” Purisima added after a meeting of the inter-agency Development Budget Coordination Committee (DBCC) to review economic forecasts.

The economy grew 0.9 percent in 2009, 3.8 percent in 2008 and 7.1 percent in 2007. The last time that the economy managed an eight percent growth was in 1976 during the term of Ferdinand Marcos when the gross domestic product (GDP) expanded 8.8 percent.

The DBCC maintained inflation targets at 3.5 to 5.5 percent for this year and three to five percent for next year despite the strong growth projection.

Purisima said the government was taking stock of possible assets that could be sold off to raise funds.

Expenditures this year were forecast at P1.62 trillion, up from an original plan of P1.58 trillion, while revenues were put at P1.29 trillion, slightly higher than the original goal of P1.28 trillion.

The budget deficit in the year to May was P162.1 billion, which was higher than the previous government’s forecast of P145.2 billion for the entire first half.

The government also raised the collection goal of the main tax agency this year by 3.6 percent to P860 billion, reiterating its platform of collecting higher revenues through better enforcement of existing tax laws. –DAily Tribune