Press Secretary Ignacio Bunye said the country’s "cycle of stability and investments has already been set in motion "with the implementation of unpopular fiscal reforms that was supported by the international financial and investor community.
"We have seen the strong performance of the economy and we are more than confident of achieving our goals beyond target because of the market’s agility and resiliency on the back of good governance and strong popular enterprise," Bunye said in a statement.
He said the fruits of the fiscal reforms, which included the imposition of the 12 percent value-added tax, are now being felt by the public through an increased spending on health, education and other social services and more jobs and infrastructure projects.
Bunye issued the statement as government economic managers raised the growth forecast for the year from 5.7 to 6.5 percent Gross Domestic Product (GDP) to 6.1 to 6.7 percent due to the strong performance of the peso and lower inflation.
The interagency Development Budget Coordination Committee (DBCC) said projections were bolstered by the approval of the P1.126 trillion national budget, strengthening peso and the improving fiscal position.
The DBCC also forecast the average exchange rate to P48 to P50 to the dollar and scaled down inflation projection to an average of 3.3 percent from the original four percent.
The deficit projection for 2007 is P63 billion but foreign analysts are expecting it to be as low as P58 billion, Presidential Management Staff head Cerge Remonde said.
The peso earlier reached its highest level vis-à-vis the US dollar in almost six years while the local stock market, spurred by favorable economic prospects earlier hit a 10-year high.
The DBCC said the newly approved budget would realize the government’s massive pump-priming program to jumpstart the economy.
Bunye said President Arroyo’s "super regions" program or dividing the Philippines into Northern Luzon, Metro Luzon, Central Philippines, Mindanao and Cyber Corridor, would be the vehicle to pump up the economy.
Budget Secretary Rolando Andaya Jr. meanwhile said the budget would fund some P83.8 billion worth of infrastructure projects including 3,251 kilometers of roads and P12.4-billion worth of infrastructure geared to jumpstart the economy.
The budget would also fund the hiring of 10,000 teachers and 3,000 policemen, establishment of 2,200 "Botika ng Barangays" or small village drugstores and other pro-poor initiatives.
Andaya said the approved budget would allow the government to spend more on education and health and public works after years of underspending. — Paolo Romero