Philippines Will Survive Global Financial Crisis: Arroyo

President Gloria Macapagal Arroyo expressed confidence today that the Philippines can withstand the current challenges brought about by the slowing down of the global economy and the steep global prices of rice and oil.

The President said the imposition of economic fundamentals remain firm and the funds raised through the continued collection of the value-added tax (VAT) will help cushion the effects on the country of the meltdown of the US financial system.

In her message at the mid-term Philippine Economic Briefing at the Shangri-La Makati Hotel this morning, the President said that although the global economy has hit the Philippines hard by erasing last year’s gains in the economy, the Philippines is better prepared to face these global challenges through the implementation of tough economic reforms that would result in increased revenues.

“There is no doubt that the global economy has hit the Philippines hard. The upheaval in the global economy this past year has clearly had a significant and painful impact on every Filipino through higher prices of food, fuel and rice,” the President said.

“Our economic growth has been impacted. Our growth in gross domestic product slowed down to 4.6 percent in the second quarter, a far cry from the sizzling 8.3 percent growth posted last year,” she added.

She assured though that the economic managers are doing their best on all fronts to manage inflationary pressures, provide a safety net to the poor who are hit hardest by the global developments, and deliver the growth that will continue to generate jobs and the tax revenues needed to fuel investments in the future.

She said the implementation of tough economic measures, such as the value added tax, law has resulted in the increase of the revenue collection that was invested in targeted relief to the poor through programs aimed at relieving the high price of energy and food.

She said the key projects and programs that are in place to alleviate the pain include the removal of tariffs on petroleum products; “Pantawid Pamilya” that provides targeted direct payments for the most-poor and is linked to school attendance and good health practices; Food-for-School giving school children in the most food-poor communities a kilo of rice a day to augment the family food supply;

“Pantawid Kuryente” to help pay the electric bill of indigents; Pantawid Pag-aral for interest-free college loans and scholarships; fuel discounts for public utility vehicles (PUV); “Pantawid Pasahe” to convert the engines of jeepneys and trucks to the less costly LPG, CNG or biofuels; microfinancing for the wives and immediate family members of PUV drivers and conductors; “Tulong Para kay Lolo at Lola” for the elderly who are not covered by the SSS or GSIS; upgrading of hospitals that cater to the rural poor; a supplemental calamity budget; and income tax exemption for those earning 200,000 pesos a year or below.

“The recent challenges we face are broadly external but they nevertheless require strong, decisive and targeted action internally. The heights to which oil and other commodity prices have risen were unexpected and the depth of the financial market turbulence in the U.S. is still unknown. Against this backdrop, the best buffer we have to external vulnerability is our own domestic internal strength,” the President said.

She underscored the need to build a stronger, healthier economy driven by domestic consumption and investment, and relying less on external markets, which she stressed is what the Arroyo administration’s reform agenda is all about.
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At the same time, she expressed hope that the worst is over as prices of crude oil and rice are starting to go down.

However, she stressed that the government will not be complacent but will instead continue to “focus on reining in inflation, bringing down prices of the most essential commodities; increasing targeted investments to our poor, and getting our economic engine moving in a higher gear.”