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21 June 2010

Investment and borrowing in the Philippines

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THE Department of Trade and Industry said investment pledges with its two incentives-giving agencies could grow by a fifth this year. “So far this year, [investments are] looking good,” Trade Secretary Jesli Lapus told Manila Times reporters .

He said combined commitments with the Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA) could easily rise by 20 percent by yearend.

The two agencies last year generated a total of P299.5-billion worth of investment pledges, down by about a third from 2008.

The Trade department had blamed the decline on the global slowdown.

But things are getting better, as latest data shows that BOI has already generated pledges worth P35.1 billion in the first quarter, up 717 percent year-on-year.

PEZA saw its investment commitments grow by 67.8 percent to P46.3-billion at end-May compared with P27.6 billion in the same five-month period last year.

BOI and PEZA separately target investments growth of 10 percent and 15 percent, respectively, this year.

Lapus said the successful conduct of the national elections last month, which was generally welcomed by local and foreign businessmen alike, would boost investments generation efforts.

“We do not see any fly in the ointment,” he said. THE Philippine government plans to spread over two quarters the additional borrowing it requires to cap a higher budget deficit for this year, the Department of Finance said. Finance Undersecretary Gil Beltran said the department would propose to the next President the P7-billion increase in the government’s borrowing program for this year.

“The P7 billion additional borrowings can just be divided by two for the next two quarters. Thus, we can borrow P3.5 billion in the third quarter and another P3.5 for the fourth quarter,” Beltran said.

“It is such small amount and that it can be easily spread evenly. It is a minimal amount and it is not as if the government would yield for higher interest rates during the weekly auction,” he said.

Last week, finance officials said the government may have to borrow another P5 billion to P7 billion from the domestic market after the inter-agency Development and Budget Coordinating Committee raised the government’s budget deficit ceiling to P300 billion from the original P293 billion.

This came alongside the upward revision in the country’s economic growth target to a range of 5 percent to 6 percent, from the earlier goal of 2.6 to 3.6 percent.


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