Article No. 1
Economists say revised goals within reach
by Rommer Balaba
The government can attain its revised macroeconomic targets for this year and should thus start looking beyond them, economists said yesterday.
Otherwise it might relax and grow complacent, and put long-term growth at risk.
"Government has basis to say the (targets) revision will result in better performance," said Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms.
The interagency Development Budget Coordination Committee (DBCC) earlier released new economic targets for 2002:
- 91-day T-bill rate: 7.0%-8.0% from 9.5%-10.5%
- inflation: 4.5%-5.5% from 5.0%-6.0%
- foreign exchange rate: PhP50-PhP51 from PhP51-PhP52
- export growth: 4.0% from 0%
Ponciano S. Intal, executive director of the Angelo King Institute for Economic and Business Studies at the De La Salle University, said these targets can be achieved, assuming the fiscal situation does not deteriorate further. "On the whole the adjustments are realistic," he said.
Even former National Economic and Development Authority (NEDA) director-general Cayetano W. Paderanga, Jr. thinks the targets are within reach.
He also said good numbers help improve not only individual confidence but also serve as a collective assurance that the government is doing something.
"If government decides to keep to its targets, they can do that. I have confidence in our bureaucracy to have the discipline in doing what is necessary," he said.
But Mr. Intal said these targets are more for prudential purposes, to measure the government's macroeconomic management in the short term.
"It does not mean you don't have to be aggressive and ambitious with reform programs for your structural adjustments, because in the end that's where long run issues would be," he said.
Mr. Sta. Ana noted government planners should be more strategic both in their economic assumptions and in achieving them, not only for this year but onwards as well.
An economic growth target of 4.5%, for instance, is relatively easy to hit, given previous episodes of growth revolving within and around that number, he said.
He noted the Estrada administration saw a 4.5% growth in the gross domestic product (GDP) in 2000. The real problem is sustainability, he said.
"When (GDP) growth hits 5.0%-6.0%, then the structural problems surface. So the question then is had the present administration addressed the structural problems because that should be our worry if we want longer-term growth," Mr. Sta. Ana said.
Mr. Intal added the government should not relax and content itself with meeting targets.
"Our country's competitiveness is still not quite there. We lost a quite a bit of the manufacturing sector in the 1990s and the industrial restructuring must continue," he said.
But restructuring requires big investments and public spending, which the government cannot finance given its tight financial spot.
"We have to manage our (budget) deficit. And spending would be a policy decision when it comes to that," Mr. Paderanga said.
"Yes we have a budget deficit, but the bigger problem there is our revenue collection which has not gone up," Mr. Sta. Ana added.
Key is improving the performance of revenue centers like the Bureau of Internal Revenue (BIR), which collected only 86.6 billion Philippine pesos (US$1.719 billion at PhP50.365=$1) in the first quarter, PhP12.8 billion short of its PhP99.5-billion target.
But Mr. Sta. Ana is skeptical if reforms can be implemented soon, if only to boost revenue collection.
"The 2004 election is fast approaching, so I am quite a bit skeptical if President Macapagal-Arroyo can really undertake serious reforms that would have an impact in the long term," he said.
BusinessWorld Internet Edition
June 18, 2002
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