Shortfall, economy to weigh on decision to keep spending
A decision to extend stimulus programs to next year and beyond will depend on the budget deficit and how the economy performs, officials said on Monday.
"We will continue to support a stimulus program next year but in a reduced scale," acting Socioeconomic Planning Secretary Augusto B. Santos said in a phone interview.
"We expect improvements in the economy but we cannot just abandon our pump-priming efforts," he added.
"If there is no full recovery in 2010, we may still push for an accommodative stance in 2011. But we are still monitoring developments. If we incur a large deficit, it would be counterproductive."
This was echoed by Finance Undersecretary Gil S. Beltran, who said: "It depends on how the economy will look like. It would depend on our economic growth. If growth is weak, we may need a stimulus program."
"But we do not want the deficit and our debt to go up significantly," he added.
Their comments came as a World Bank economist urged governments to keep stimulus programs in place up to 2012.
Mr. Santos said the extended stimulus package would likely include funding for infrastructure and conditional cash transfers.
"The key areas will be infrastructure and conditional cash transfers. [The stimulus] will be funded by the budget. That is why we are working hard for the approval of the 2010 budget before the end of the year," he said.
The P1.541-trillion outlay for 2010 was approved by the House of Representatives last month and is undergoing plenary discussions at the Senate. Congress leaders have said final ratification could be made before next week’ s break.
The government has increased spending to cushion the impact of the global financial crisis. As a result, economic managers hiked this year’s deficit cap to P250 billion from P199.2 billion.
In August, economic managers raised next year’s fiscal gap to P233.4 billion from P208.4 billion, citing the need for another stimulus program.
Specific details have yet to be announced, but Budget Secretary Rolando G. Andaya, Jr. has said the package would focus on long-term aims as well as "shovel-ready" infrastructure projects.
As of October, the budget gap had breached the full-year cap, hitting P266.1 billion due to anemic revenues. — BusinessWorld
"We will continue to support a stimulus program next year but in a reduced scale," acting Socioeconomic Planning Secretary Augusto B. Santos said in a phone interview.
"We expect improvements in the economy but we cannot just abandon our pump-priming efforts," he added.
"If there is no full recovery in 2010, we may still push for an accommodative stance in 2011. But we are still monitoring developments. If we incur a large deficit, it would be counterproductive."
This was echoed by Finance Undersecretary Gil S. Beltran, who said: "It depends on how the economy will look like. It would depend on our economic growth. If growth is weak, we may need a stimulus program."
"But we do not want the deficit and our debt to go up significantly," he added.
Their comments came as a World Bank economist urged governments to keep stimulus programs in place up to 2012.
Mr. Santos said the extended stimulus package would likely include funding for infrastructure and conditional cash transfers.
"The key areas will be infrastructure and conditional cash transfers. [The stimulus] will be funded by the budget. That is why we are working hard for the approval of the 2010 budget before the end of the year," he said.
The P1.541-trillion outlay for 2010 was approved by the House of Representatives last month and is undergoing plenary discussions at the Senate. Congress leaders have said final ratification could be made before next week’ s break.
The government has increased spending to cushion the impact of the global financial crisis. As a result, economic managers hiked this year’s deficit cap to P250 billion from P199.2 billion.
In August, economic managers raised next year’s fiscal gap to P233.4 billion from P208.4 billion, citing the need for another stimulus program.
Specific details have yet to be announced, but Budget Secretary Rolando G. Andaya, Jr. has said the package would focus on long-term aims as well as "shovel-ready" infrastructure projects.
As of October, the budget gap had breached the full-year cap, hitting P266.1 billion due to anemic revenues. — BusinessWorld
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