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The Honolulu Advertiser
Posted on: Wednesday, May 9, 2001

Philippines works to reduce budget deficit

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By Andrew Gomes
Advertiser Staff Writer

As Philippines President Gloria Macapagal-Arroyo lifted the "state of rebellion" in Manila, her top economic Cabinet officials yesterday morning told international finance ministers and bankers that the government is progressing with economic reform.

"We're resolved to put the economy ahead of politics in our order of priorities," said Philippines President Gloria Macapagal-Arroyo.

Advertiser library photo • April 30, 2001

"Over the last 100 days, we have been able to put the country back on its feet," Macapagal-Arroyo said in a videotaped message to a meeting of the Asian Development Bank in Honolulu. "We're resolved to put the economy ahead of politics in our order of priorities."

It was the first economic policy presentation by the Macapagal-Arroyo administration to the international finance community since the former vice president assumed leadership of the country in January after the Philippine Supreme Court deposed Joseph Estrada on corruption charges.

Arroyo and her economic team said that although challenges remain, the country's political troubles are largely over, which makes it easier for the government to focus on what officials called a "businesslike" economic reform that will rely on market principles and the private sector.

Philippine Finance Secretary Alberto Romulo told the crowd of 150 at the Hawai'i Convention Center that the administration is concerned by the country's budget deficit, poor governance and pervasive corruption.

The government has adopted frugal spending to reduce the budget deficit, which narrowed last month after swelling to record levels in the past three years. Still, the gap was 1.3 percent above the government's target for the first four months of the year.

Romulo said the government's goal is to balance the public sector budget by 2004 and achieve a surplus by 2006.

Growth targets in the gross national product are pegged at 4.0 percent to 4.5 percent this year and 5.1 percent to 5.6 percent next year.

Among the expected main drivers of economic growth are tourism, which is being aggressively promoted; domestic investments, which are expected to rise by 2.6 percent to 3.6 percent after 0.8 percent last year; the return of foreign investment; and opportunities in information technology.

Emilia Boncodin, Philippine budget and management secretary, said restoring fiscal discipline is at the top of the government's economic reform agenda. She said the administration intends to enhance tax revenues by strengthening audits, cracking down on smuggling, fully implementing tax reform and expanding the excise tax.

Nontax revenue enhancements are being sought through privatization of state-owned enterprises, strictly collecting dividends from state-owned enterprises and enforcing higher government fees, Boncodin said.

?Moving to a multi-year budget cycle, which involves making three-year annual forecasts, should help better plan government expenditures, she added.

Addressing government corruption, Boncodin said the government has formed a presidential antigraft commission, and is creating a national anti-smuggling agency. Also, government transactions involving the first family have been prohibited.

The finance team, Macapagal-Arroyo and other administration officials have been working amid violent protests and attempts to overthrow the new government. Four people died and more than 100 were injured last week as demonstrators supporting Estrada clashed with security forces while trying to storm the presidential palace.

Justice officials ordered the arrest of 11 people, including Sen. Juan Ponce Enrile, under suspicion of plotting to kill Macapagal-Arroyo and a jailed Estrada in an attempt to take over the country.

Andrew Gomes can be reached at 525-8065, or by e-mail at agomes@honoluluadvertiser.com.