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July 29, 2008

Philippines President offers little new in policy speech

Philippine President Gloria Macapagal Arroyo offered no fresh solutions to slowing economic growth and soaring inflation in a policy speech on Monday that seemed certain to cement her stubbornly low popularity ratings, reported Reuters.

Arroyo, whose final term ends in 2010, refused to heed calls to reduce a sales tax on fuel, saying it provided much-needed revenues that would help the Philippines through what she described as a "terrible tsunami" of global economic uncertainty.

"For the guts not to flinch in the face of tough choices, I thank God," a grim-faced Arroyo told the joint chambers of Congress. "For footing the bill, I thank the taxpayers."

Arroyo ditched a dearly held goal of balancing the budget this year to hike spending and salvage her economic legacy from a global slowdown and record leaps in commodity prices.

Political bickering, however, held up the stimulus package and economists, who have been steadily scaling back their 2008 growth forecasts, now expect annual growth of 5.1 percent this year compared to a 31-year high of 7.2 percent last year.

Arroyo said on Monday that the Philippines, which imports most of its oil and is the world's biggest buyer of rice, needed to become more self-sufficient in food and fuel.

But she did not give any new initiatives and instead listed government investments in agriculture.

Analysts were disappointed with the lack of specifics. One, who declined to be named, said he deleted his emails to help stay awake during the 47-minute speech.

"There was no follow through after the major statements," said Jonathan Ravelas, chief market strategist at Bance de Oro in Manila.

"Focus on the economy, fiscal prudence and revenues, those are positives to the market. But part of the fiscal responsibility is actively managing your expenses, that wasn't discussed."

Outside Congress, over 3,000 people demonstrated with banners and effigies of the former economist, who is distrusted because of lingering allegations of vote fraud and corruption.

Arroyo highlighted a territorial deal with the country's largest Muslim rebel group, which was hastily patched up on Sunday night in time for Monday's speech.

She hopes the agreement with the Moro Islamic Liberation Front (MILF) will be the prelude to an eventual formal peace deal to end the near 40-year conflict but analysts are sceptical, citing the government's stop-go attitude to talks.

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