Philippines expects higher deficit

RP can cope with higher deficit: central bank


Agence France-Presse | 02/11/2009 8:44 PM

Send to friendSend to friend

A budget deficit exceeding two percent of the Philippines’ gross domestic product this year is acceptable amid the global financial crisis, central bank governor Amando Tetangco said Wednesday.

“There is an openness to allow a higher deficit to GDP ratio. Two percent or higher is not a bad number,” he told a bankers’ forum here.

Finance Secretary Margarito Teves has said the 2009 deficit would rise to 102 billion pesos (2.07 billion dollars) or 1.2 percent of GDP.

Tetangco said that the Philippines could withstand a higher budget deficit since inflation and interest rates remained low, the peso was stable and the banking system remained strong despite the crisis rocking the world’s financial system.

“As external markets decline, there will be a greater reliance on internal aggregate demand,” he said, adding that reforms undertaken after the 1997 Asian crisis would also help.

The government expects GDP growth of between 3.7 and 4.7 percent this year with inflation continuing to decline.

President Arroyo wants to stimulate growth through increased public spending on infrastructure and targeted handouts to the poor.

Speaking at the same forum, former finance secretary Jose Isidro Camacho, now a vice-chairman of Credit Suisse Asia-Pacific, expects Philippine GDP growth at 3.5 percent this year while Luz Lorenzo, economist of ATR-Kim Eng Securities said it could reach as high as 4.9 percent.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s