NEDA head says RP to grow 6.5-7% this year

MANILA, Philippines – Acting National Economic and Development Authority Director General Augusto Santos said Tuesday the gross domestic product was expected to grow 6.5 to seven percent this year because of additional spending that the government would undertake.

Santos said the second quarter GDP might be as good, if not better than the 7.3 percent posted in the first quarter.

“The main reasons are the global economic recovery plus there was still a little bit of election spending in the second quarter,” Santos said.

Santos said the 6.5 to seven percent GDP growth was only his estimate and that he was optimistic that the five to six percent target for this year was easily achievable.

“We’ll have to wait for the second quarter actual performance before we can say that it can be higher than, but I think five to six percent is already safe,” he said.

Asked if the figures could be raised because of additional spending, Santos said: “There is a chance especially that this new government has decided to increase the deficit spending from P300 billion to P325 billion. With a lot more spending there is a greater chance of having more economic growth,” Santos said.

“Maybe it can be in the range of 6.5 to 7 percent, because of spending. There is really elbow room for spending because the inflation has been benign. I think that we should continue with this accomodative fiscal and monetary policies, central bank has decided to keep interest rates as is. For fiscal spending the budget speaks for itself,” he said.

Finance Secretary Cesar Purisima said they would still have to review the figures and would likely announce the official numbers after the Cabinet meeting today.

He said he could not confirm the numbers without reviewing all the data first.

“We’re looking forward, we believe that what’s past is past and we cannot do anything about it so what’s important to us is what we will do over the next six months which we have declared and what we’ll do over the next six years, I think that’s what’s important so what happened the past six months is something we cannot do anything about,” Purisima said.

As regards plans for foreign borrowing to help plug the deficit, Purisima said “there’s always a foreign and local component, depending on whether the market offers good opportunities for us.”

“We have to be opportunistic about all of these things so we can get our debt at the cheapest cost,” Purisima said.

Purisima said he had talks with three credit rating agencies regarding the country’s status.

“It was good, they liked the approach that we’re doing-proactive discussion with them. I’ve told them that whatever is happening in the Philippines they’ll hear it from me first before the press, because it’s important that I engage them actively,” Purisima said.

“If you look at our rating its lower than Indonesia yet our credit ratings, the credit default swap of the Philippines is better than Indonesia, our borrowing cost is better than Indonesia, the market is actually rating us better except that there are certain things that they are worried about which is our debt level, that’s why we’re addressing it,” Purisima said. –Aurea Calica (The Philippine Star)