Philippine Partners Praise Strong Growth, Call for More Focus on Poverty Reduction

Promote Growth that Creates More and Better Jobs, Increases Incomes of Poor Filipinos

Clark Field, Pampanga, March 27, 2008 – More than 300 representatives from the government, international development community, business groups, and civil society met and concluded today the Philippines Development Forum (PDF) at Clark Field, Pampanga. President Gloria Macapagal Arroyo and Vice President Noli de Castro joined the participants who reviewed the country’s progress in achieving broad-based growth and plans to sustain it and make it more inclusive. The theme of the PDF this year is Accelerating Inclusive Growth and Deepening Fiscal Stability.

The international development partners congratulated the Philippines for its strong performance in growth, particularly over the past three years which has been faster than any similar period in the past two decades. The country’s growth rate of 7.3% in 2007 made the Philippines one of the stronger performers in the Southeast Asia. The remarkable turnaround from only a few years ago was cited as a reflection of the Government’s determination to address the country’s macroeconomic issues. This commitment to fiscal discipline has maintained market confidence, resulting in lower spreads and significant capital inflows. Average inflation last year was the lowest since the 1980s. And, after several years of expenditure compression, the trend in declining capital expenditures was reversed in 2007 with the general improvement in fiscal balance.

In her keynote address, President Gloria Macapagal-Arroyo said, “We are at a tipping point. I’m confident that the Philippines will tip forward in pursuit of reaching the status of first-world within a generation.” Still, the President promised that the country would stay focused on further economic reforms while providing peace, order and stability. She declared, “Our last two years will be dedicated to our main objective: Invest, invest, and invest some more in the nation.”

The PDF participants identified three critical challenges:

* Sustaining growth and maintaining fiscal discipline
* Supporting growth that benefits the poor
* Strengthening governance and fighting corruption

Sustain Growth and Maintain Fiscal Discipline
Everyone acknowledged the need for continued vigilance in macroeconomic and fiscal management. Finance Secretary and PDF 2008 Chairperson Margarito Teves identified measures to improve tax collection on a sustainable basis. He emphasized, “Improvements in the fiscal position provide additional headroom for investments in vital infrastructure and social services.” He also stressed the importance of improving tax compliance, adding, “I would like to focus on an approach this year that sees the successful conviction of cases under the Run After Tax Evaders (RATE) and Run After the Smugglers (RATS) programs.” He also said that the Government would establish a joint government-civil society body to monitor tax collection, gather lifestyle and corruption information, and follow up major evasion and smuggling cases.

Improving the investment climate and putting into place critically needed infrastructure were recommended to sustain and accelerate growth, create more jobs, and deliver basic services to a greater number of the poor. While participants noted the significant increase in domestic and foreign investments, the current level remains low compared to similar economies in the region.

Businessman Jaime Augusto Zobel de Ayala, Chair and CEO of Ayala Corporation, shared his views on how to attract more investments. He said, “We must build on the fundamental issue of a progressive governance standard. Clear adherence and enforcement of the rule of law, transparency, respect for the sanctity of contracts, consistency in policies are all essential ingredients to establishing an investor-friendly climate that will lead to economic growth.”