MANILA, Philippines - The two typhoons that ravaged the country recently could trim gross domestic product (GDP) growth this year to 0.6 percent to 1.6 percent or below the revised official target of 0.8 percent to 1.8 percent, Finance Secretary Margarito Teves said late Friday.
However, Teves said economic managers are not changing the growth targets just yet, hoping that there would be “compensating factors” such as dollars from overseas Filipinos and activities from reconstruction spending.
“We don’t know if there will be compensating factors. We don’t know yet how remittances will perform,” he said.
Teves said the damage caused by typhoons Ondoy and Pepeng is currently estimated at P12 to P14 billion. He said that a damage of P7 billion is enough to bring about a 0.1-percent change in GDP.
In the first quarter of the year, the economy grew by a measly 0.4 percent due mainly to the global financial crisis but slightly recovered in the second quarter, achieving a 1.5-percent growth.
Teves nonetheless said dollar remittances from Filipinos abroad may help the government achieve the full-year growth targets.
Remittances from overseas Filipinos rose to $1.5 billion in July from $1.4 billion in the same month last year, posting the highest year-on-year growth for 2009 at 9.3 percent and have been steadily pouring in for the affected relatives of Filipinos abroad.
Rehabilitation spending could also boost economic growth, Teves said.
Budget Secretary Rolando Andaya Jr. said the government can raise the money needed to aid flood victims and rehabilitate affected areas even without the proposed P10-billion supplemental budget from Congress.
“With or without the supplemental budget, the government will spend for rehabilitation using resources available or authorized under the 2009 budget. The principal source will be the current year’s budget,” he said.
He said budget laws allow flexibility in realigning funds to where they are needed.
Andaya said he recommended to lawmakers last Friday the tapping of the “Unprogrammed Fund” in the 2009 budget in funding activities which the proposed P10 billion supplemental Calamity Fund seeks to authorize.
“The legal rule in crafting a supplemental budget is that funds for the purpose are already collected, as certified by the National Treasurer, or these can be raised through a revenue measure,” Andaya said.
He said the congressmen realized that the two options can’t be availed off in the case of the supplemental budget because the government is running a huge deficit and that it is already “late in the day to pass a tax measure.”
The government’s budget deficit had swelled to P210 billion as of end-August, only P40 billion shy of the full-year projected ceiling and almost seven times more than the P31.7 billion deficit incurred in the same period last year.
“So the next route is via the Unprogrammed Fund which can only be tapped if there are loan and grant proceeds or if revenues over and above the original target for the year will materialize,” Andaya said.