Socioeconomic Planning Secretary and National Economic and Development Authority Director-General Ralph G. Recto said that strategies to boost growth should be pushed in light of the current global slowdown and increased food and fuel prices, which includes improving capacity of government agencies in using their budgets, encouraging diversification, innovation and upgrading exports, continuing strong support for agriculture and attracting more investments from countries like China and the Middle East.
“In order to meet the economic growth targets, the following are some of our key strategies. First is to increase the absorptive capacity of government agencies. We are directing the infrastructure agencies to prepare their engineering plans now for projects in the proposed 2009 budget. We must also proceed with procurement reforms to ensure that they are indeed transparent and efficient; improve the technical, legal and financial expertise as well as planning and implementation capacity of our agencies. The central government must improve its coordination with local government units to ensure that infrastructure development will reach remote municipalities, particularly by identifying and implementing projects,” he said during the Mid-Year Philippine Economic Briefing held in Makati City.
Recto said that the country’s manufacturing and exporting firms need to enter into high-end product lines to generate greater revenues and to become more competitive. The government should continue its strong support for agriculture via the FIELDS program.
Recto underscored the need to attract investments from China and the Middle East. China is the rising dragon of the century offer a mammoth market and a vast reservoir of capital, and there is a need to expand trade, investment, and tourism with this nation, as well as draw investments from the Arab nations that are awash with oil revenues
“For the remainder of the planning period, the strategic investments needed to boost growth can be summarized in the catchword HEARTS: Health, Education, Agriculture, Roads/Bridges/Railroads (infrastructure), Technology/Tourism, Security/Shelter/Social Protection/Subsidies. I shall focus though on R or infrastructure investments of the HEARTS,” he said.
To implement these strategies, according to the NEDA Chief, there is a need for the immediate approval of the 2009 budget. “I ask Congress: Please pass the budget on time so that we can make infrastructure investments on time. This would help increase the absorptive capacity of agencies. Recall that the 2008 budget was approved only in March. Because of this, agencies were not able to maximize use of their funds during the first half of the year and take advantage of the good weather season,” he said.
Despite concerns over the possible impact of the slower global economy and rising commodity prices on growth prospects, the NEDA chief said that “the ship steams on as growth continues to be resilient, because of fiscal reforms and achieving macroeconomic stability.
“Amid the storm in global finance we remain secure, for we have done our homework. Fiscal reforms, most notably the passage of the expanded Value-Added Tax law, have yielded vital revenues since 2005. As a result, the national government deficit has been falling, from PhP187 billion in 2004 to PhP33 billion as of July. Hence, the country is on track to balance the National Government budget by 2010,” Recto explained.
Another fact that is under-appreciated, according to the NEDA chief, is that surpluses have been posted in the wider public sector accounts for the past two years. Because of the fiscal reforms, the debt burden has been easing, as seen in falling debt to GDP ratios. “The added revenues have allowed us to reemphasize infrastructure spending. Then we have our rising pool of foreign exchange, thanks to the combined streams of exports, outsourcing, tourism, and overseas workers’ remittances. Our balance of payments remains in a healthy surplus,” he explained.
These factors have been instrumental in addressing the major challenges, like volatility in world oil prices, higher food prices, inflationary pressures, and the slowdown of exports.
“Let me stress that we are confident. The storm is here, yes, but we have built quite a strong ship. It has a secure foundation of fiscal reform. It has more resources at its disposal. It is investing more on infrastructure. Its diaspora of workers will ensure a steady base of growth no matter what comes. I hope we can unite on this ship and get all hands on deck,” Recto said.