Government to maintain economic growth target at 7% to 8%

MANILA, Philippines – The Aquino administration is keeping the economic growth targets for the year at seven percent to eight percent despite the huge blows that the economy may experience as a result of the earthquake that battered Japan last March 11.

Budget and Management Secretary Florencio Abad said that there are no adjustments for now but noted that members of the country’s economic team are on standby for possible impact of the developments in Tokyo.

“The accumulation of the changes that we are tracking is not as yet as large enough for us to necessitate an adjustment or revisions in the growth target,” Abad told reporters yesterday.

The interagency Development Budget Coordination Committee (DBCC), the group that sets the country’s macroeconomic assumptions and targets, met last Friday to assess the situation.

Abad, who co-chairs the DBCC along with Finance Secretary Cesar Purisima, said the biggest source of risk is the oil situation and the political crisis in the Middle East.

“The biggest source of concern right now is the political crisis in the Middle East,” Abad noted.

Abad said this would impact on the oil situation, may tighten supply and jack-up domestic pump prices. “With higher oil prices, comes the higher cost of transportation.”

As such, he said the government would be implementing a fuel adjustment program for some 300,000 beneficiaries.

Under the program, transport groups such as jeepney and bus operators would be given a subsidy for their gasoline expenses.

Abad said an interagency team is already threshing out details of the project, which may be implemented in the early part of the next quarter. “The most efficient way to is distribute fuel credits,” he said.

He said the government is eyeing to provide fuel credits to bus and jeepney operators, possibly with the help of state-owned government financial institutions, which can provide ATM-like cards to the targeted beneficiaries.

The World Bank has said that the damage caused by the recent earthquake and tsunami in Japan could reach $235 billion.

Last year, the Philippine economy grew by 7.3 percent, the highest growth recorded in 34 years. –Iris C. Gonzales (The Philippine Star)