Friday, 10 July 2009

ADB sees positive growth for Philippine economy

ADB sets aside $4.3B in aid for RP
Institution hopes to make dent on poverty

Ronnel Domingo
Philippine Daily Inquirer

MANILA, Philippines – The Asian Development Bank has earmarked at least $4.3 billion in aid for the Philippines through 2012 to push the domestic economy to a “sustained high-growth path.”

Neeraj K. Jain, ADB’s country director for the Philippines, said in a briefing that disbursements for 2009 alone would likely exceed $1.3 billion.

“Normally, the ADB [releases] $400 million to $600 million yearly,” Jain said. “This year’s amount is more than double the usual as the country feels the impact of global economic developments.”

Also, an assistance package of between $2 billion and $3 billion for the Philippines covering 2010 to 2012 is now being discussed, Jain said.

He explained that help for the Philippines in 2009 would come in the form of greater support for national budgetary needs, a support facility for efforts to counter the current state of the global economy, and allocations for much needed infrastructure.

“The Philippine economy is expected to maintain positive GDP growth in 2009,” Jain said. “That is a fantastic development considering that the economies of other countries are contracting.”

GDP refers to the total value of goods and services produced and paid for within an economic territory at a given time.

The government reported that in the first quarter, GDP grew by only 0.4 percent compared to the same period in 2008.

Jain said that the ADB’s estimate as of March – that the Philippine economy would grow by 2.5 percent this year – “now seems ambitious.”

Still, he said, continuing growth in the value of remittances from overseas Filipinos, the recent improvement in business confidence and turnaround in electronic exports were positive signals.

However, he said, the country faces downside risks arising from a longer-than-expected downturn in industrialized countries and the further weakening of government revenues.

Jain said the government’s medium-term fiscal stabilization efforts should be anchored on raising the tax effort rather than reducing public spending.

“For the economy to move to a sustained high-growth path, greater spending is needed on infrastructure, like roads and ports, and in social services like education,” he said.

By a sustained high-growth path, the official meant growth rates of 7 to 8 percent to be posted continually over a period of 10 to 12 years.

Such economic performance is required to make a real dent on poverty, Jain explained.

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