RP lags neighbors in poverty-reduction goal, says ADB

THE ASIAN DEVELOPMENT BANK HAS RAISED ITS growth projection for the Philippines for 2010, citing improved global economic conditions that should boost foreign investments and demand for the country’s exports.

However, the ADB expressed concern that the country was performing poorly compared with its neighbors in terms of meeting the Millennium Development Goals (MDGs), specifically on poverty reduction. While the Philippines is poised to accelerate growth from last year’s, ADB said the country was far from reaching internationally set economic- and social-development goals.

The multilateral agency expects the Philippine economy to grow 3.8 percent this year, up from its earlier projection of 3.3 percent. For 2011, the ADB forecasts an economic growth of 4.6 percent.

The projection is anchored on expectations of a strong pickup in export revenues and sustained growth in remittances sent by Filipinos overseas. Remittances fuel household consumption, which drives economic growth.

“The Philippines is expected to recover significantly this year and next from a very weak 2009 … [but] has been investing less in social sectors and infrastructure than most of its neighbors, partly due to the tight fiscal situation, high public debt, and poor business climate,” the ADB said yesterday in a statement on its latest outlook on the country and other Asian countries.

Neeraj Jain, country director of the ADB for the Philippines, said in a press briefing that the Philippines should invest more in infrastructure and work on attracting more investments to accelerate growth to levels that would make it achieve the target on poverty reduction and other MDGs.

The poverty reduction target under the MDGs is for countries to halve poverty incidence by 2015. In the case of the Philippines, that means reducing the proportion of poor Filipinos to 17 percent of the total population.

Latest indicators so far showed that the Philippines was lagging in that goal. Latest available data in fact showed that the poverty incidence stood at 33 percent in 2006, up from 30 percent in 2003.

Pending the release of a more recent poverty incidence data, economists expected a higher figure for 2009 of at least 35 percent, given the adverse impact of the global economic turmoil on the Philippines.

Jain said investments-to-GDP ratio in the Philippines stood at only 14 percent. He said the country should target to raise this to at least 20 percent to help generate more jobs and counter the trend of rising poverty.

“In terms of achieving the MDGs, the situation does not look too good for the Philippines compared with that [of its] neighbors in the region,” Jain said.

He suggested that the government implement proposed measures to shore up tax collection so it could afford to invest in infrastructure, which was crucial for investment decisions.

Bills pending in Congress that are intended to help raise more revenues for the government include the lifting of “unnecessary” tax- and duty-free privileges enjoyed by some businesses and higher taxes on cigarettes and alcohol. –Michelle Remo, Philippine Daily Inquirer