PGMA approves P1.54T budget

 According to the Institute for Development and Econometric Analysis, Inc. (IDEA), President Gloria Macapagal-Arroyo approved this year’s national budget of P1.54 trillion, giving rise to Republic Act 9970. This year’s budget is 8% higher than last year’s P1.43 trillion. Budget Undersecretary Laura Pascua said that the fiscal stimulus will not be as much as the earlier estimate of P330 billion, as infrastructure spending will be less, but social program expenditures will still be prioritized. With this year’s budget, projected government deficit will be P233.4 billion or 2.8% of the gross domestic product.

 Accordingly, the Bangko Sentral ng Pilipinas (BSP) reported a decline in the inflows of foreign portfolio investments last month. Data revealed that foreign portfolio investments reached only $170 million, down from last year’s $221 million. The BSP claimed that this was a turnaround from last December’s outflow of $43 million. However, net foreign direct investments (FDI) posted $1.41 billion in November, up from the same period of last year’s $1.336 billion. The BSP recorded a 5.5% year-on-year growth in net foreign direct investments, a turnaround from the 52.7% drop registered in November 2008.

Furthermore, the department of Finance estimates that P1.68 billion of revenues will be lost annually upon the signing of the bill that exempts senior citizens from paying value added tax (VAT). The Department is proposing to instead increase the discount given to senior citizens to 30% from the current 20%, as any VAT exemption measure will erode the government’s revenues.

On the other hand, prices of liquefied petroleum gas (LPG) will be reduced by P0.50 per kilogram in light of declining international prices. This will make an 11-kg LPG tank cost P586, down from the current price of P592. Liquefied Petroleum Gas Marketers Association President Arnel Ty believes that another price cut will follow next week and the week after next as contract prices in March are anticipated to decline by $30. While cement makers are petitioning the government to increase tariffs imposed on cement imports from 3% to 5%, after the tariff structure expires. Cement Manufacturers’ Association of the Philippines (CeMAP) President Ernesto Ordonez believes that this move is needed to indicate that the industry is also being protected by the government.

 Also, the National Food Authority (NFA) was authorized to raise the import of limit of rice to 3 million tons from the previous 2.4 million tons. This is a precautionary measure of the state for the possible effects of El Niño on local rice production. However, NFA spokesperson Rex Estoperez said that the new limit is still under the worst case scenario predicted by the agency.

Lastly, the National Grid Corporation of the Philippines announced that there is a deficit in the supply of power in Luzon amounting to at least 500 megawatts, as no power reserves are left. Manila Electric Co. utility economics manager Lawrence Fernandez cautioned the public that there will be two- to three-hour power interruptions twice a day.

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