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NEWS UPDATES 24 July 2009

Philippines plans second stimulus package

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Philippines’ Department of Budget and Management (DBM) is considering a second-stimulus package that would be incorporated in the 2010 national budget to ensure President Arroyo’s pump priming programme is sustained, the Manila Times reported.

The agency’s announcement comes as businessmen expect President Arroyo to reiterate her commitment to pump priming the eco-nomy during her upcoming State of the Nation Address (SONA).

Budget Secretary Rolando Andaya Jr. said the DBM is looking at including another Economic Resiliency Package (ERP) worth at least 160 billion peso in the draft outlay for next year.

“We want it included to ensure there’s a continuation of the stimulus program,” Andaya said.

He said the second tranche will still focus on financing infrastructure programs that have a big impact on jobs and consumer spending.

Andaya earlier said the emerging budget for 2010 is around 1.5 trillion peso, a little over the current 1.415 trillion peso.

He said the final size of the second ERP, however, would largely depend on the capacity of government departments and agencies to spend their allocations this year. The budget secretary noted that some state agencies are having problems with absorptive capacity, which delays the speed of project implementation and, thus, impedes its direct impact on the economy.

He said most of the projects, when not implemented right away, will cause a dent in the government’s over-all expenditure program.

Edgardo Lacson, Philippine Chamber of Commerce and Industry (PCCI) president, agreed, saying, “We urge the government to front-load infrastructure spending now, before the impact is lost.”

The PCCI official said a recent study noted two main reasons for project delays: the difficulty in securing the “right of way” and the usually delayed release of funding from the DBM.

Citing the private sector’s monitoring of the infrastructure projects under the Medium-Term Philippine Development Plan, Lacson said about 40 projects are expected to be completed this year, and another about 40 next year, out of a total of 149.

He said the North Luzon Expressway extension, the connecting terminal of the Light Rail Transit Line 1 and Metro Rail Transit Line 3, as well as the expansion of the Caticlan airport are among the private sector-led initiatives.

Andaya agreed that “slight under-spending” occurred during the first half of the year owing to the delays in the implementation by departments and agencies of big-ticket infrastructure projects like airports and highways.

He, however, said the utilisation rate of agencies has improved to 98 percent from 85 percent last year. The government earlier unveiled an ambitious P330-billion economic stimulus package to perk up the economy with emphasis on rolling out infrastructure projects.

Of that amount, only 160 billion peso was included in the 2009 budget while the rest of the stimulus package will come in the form of tax breaks and other projects to be funded through private sector-government partnerships.


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