RP plans P300-B stimulus package to create jobs, boost growth
AFP, Reuters | 12/16/2008 9:56 PM
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The Philippine government plans to speed up spending on infrastructure and social services, and cut tax rates, in the first half of 2009 to ensure jobs are created and a major slowdown in growth is prevented, officials said on Tuesday.
The spending plan includes a P300 billion ($6.3 billion) stimulus package for 2009, presidential aides said.
The priority would be "easy to implement projects" like repair and rehabilitation of roads, hospitals, bridges and irrigation facilities, school and government buildings, that socioeconomic planning secretary Ralph Recto said would allow the country to gear up when the world economy recovers.
"(We have to) make sure these projects have high labour employment, high local value added, so that there is a multiplier effect among the different industries involved to ensure more jobs are saved, secured and created next year," Recto told reporters.
The government also plans to hire 10,000 new teachers and about 3,000 additional policemen and paramilitary personnel this year, Recto said.
The government is also "doubling" direct cash transfers and social protection programs for the two in five Filipinos who are officially considered poor.
That will go along with a P300 billion stimulus that would go into tax rebates that could see corporations' tax rates drop to 20 percent from 30 percent.
"The equivalent of that in effect is a stimulus of P20 billion in corporate Philippines," Recto said.
Higher exemptions would be made for individual taxpayers, while state-run banks and corporations would be ordered to pay their share in the package, including in the form of health care benefits and pensions, he added. "That will also improve personal consumption (and) help spur the growth of the economy."
Jobs
Data showed earlier in the day the jobless rate fell to 6.8 percent in October from 7.4 percent in July as the Philippines remained largely spared from the ravages of the global financial crisis.
But if many Filipino workers overseas -- equivalent to about a tenth of the Philippine population of 90 million -- lose their jobs and return home, that would create further pressure on domestic employment.
The country has one of the highest unemployment rates in the region, and about a third of its population is considered poor.
"We need fast-moving projects (and) we need to be able to implement these during the first six months of 2009. That's the time for us to recover. If we miss that train, it would be difficult," Budget Secretary Rolando Andaya told reporters.
Recto said President Arroyo discussed the plan with her most senior economic aides on Tuesday. The stimulus plan is equivalent to four percent of the 2009 national budget, he added.
President Arroyo said on Tuesday slightly more than 1,000 Filipinos had lost their jobs abroad as foreign firms cut costs to cope with the worsening financial crisis.
About half of overseas Filipinos are based in the United States, where the global credit crisis originated.
The economy grew 4.6 percent in the nine months to September, down from the 7.2 percent seen in 2007 as commodity exports suffered from the global financial meltdown.
Budget deficit
Unlike its neighbour Singapore and Japan, the Philippines is not expected to fall into recession with the economy expected to grow at 3.7 to 4.7 percent in 2009, although slower from a projected 4.1 to 4.8 percent this year, based on government estimates.
Recto said there was a chance the economy could hit the high-end of the government's 2009 growth forecast if the planned spending takes place immediately.
He said the government would use "every peso" of savings from the national budget and use that to "create as many jobs as possible."
The government has a spending plan of P1.41 trillion ($30 billion) in 2009, about 14 percent higher from 2008, and has said it could afford a higher budget deficit next year to fund infrastructure projects and provide more social services.
It has set a budget deficit of P102 billion in 2008, more than double an earlier estimate of P60 billion and higher than a projected shortfall of P75 billion this year.
Finance Secretary Margarito Teves said he understood Congress was open to raising the 2009 budget deficit to P162 billion from the previous government proposal of P102 billion.
