P72-b stimulus package up

President Benigno Aquino III unveiled Wednesday a P72-billion stimulus package of public works and poverty reduction projects as a weakening global economy forced the country to cut growth forecasts.

The additional spending authorized between now and the end of the year includes a support fund for local governments of at least P6.5 billion for infrastructure development and poverty alleviation, Aquino said in a speech. Economic officials cut their 2011 growth forecast to a range of 4.5 percent to 5.5 percent, from 5 percent to 6 percent.

“We want to put ourselves in a position to grow faster when the world recovers,” Finance Secretary Cesar Purisima told reporters. “When markets abroad weaken, no economy will be unaffected. The only question is how much growth will be affected and what we’re doing is to help counter the slowdown.”

The Philippines became the first Asian nation outside Japan to announce a stimulus plan this year to bolster slowing growth, with neighboring Indonesia choosing to cut interest rates Tuesday while others including Malaysia and South Korea have refrained from further monetary tightening. The spending package will use funds from other projects that are behind schedule, the government said, enabling it to trim its budget deficit forecast.

“This is a positive movement for the domestic economy especially if the central bank wants to remain on hold for the rest of the year,” said Betty Rui Wang, a Hong Kong-based economist at Standard Chartered Plc. “But the current package is quite small. I doubt whether the impact will be substantial.”

“If the fiscal stimulus does its job, this should give the necessary push to keep our economic growth in a solid upward trajectory,” central bank Governor Amando Tetangco said. The Philippines has sufficient liquidity, a stable exchange rate and a “manageable” inflation outlook along with “fiscal space” to help support economic growth, he said in an e-mail reply to questions.

Growth in the $200-billion economy may range from 5 percent to 6 percent in 2012, compared with a previous forecast of 5.5 percent to 6.5 percent, Economic Planning Secretary Cayetano Paderanga said. Growth this year would have missed even today’s lower forecasts without the stimulus package, the government said.

The government will accelerate a plan to upgrade railways in Metro Manila, build low-cost housing, and repair roads and bridges damaged by typhoons, Budget Secretary Butch Abad told reporters after presenting the new economic targets to lawmakers. Elaine R. Alanguilan, Bloomberg