Gov’t banks on recovery to end stimulus spending

The government is looking outward for clues about when to withdraw its fiscal stimulus program — estimated at P100 billion this year — as it aims to balance the budget by 2013. "We have to get a sense from other countries whether an exit strategy is already in order after 2010. We’re hoping the recovery this year will be strong enough," Finance Secretary Margarito Teves said at a forum on infrastructure at the Asian Development Bank headquarters in Mandaluyong City on Monday. The special spending package is meant to ensure the economy would grow by as much as 3.6 percent this year from 0.9 percent last year. The government set aside about P330 billion last year — money that Teves said had been wisely spent on building public infrastructure ruined by floods — to stimulate the economy amid the global economic slump that pushed some of the world’s richest countries into recession. While this year’s special spending program is lower, higher money supply would hopefully render future stimulus spending unnecessary, Teves said. Last week, the World Bank noted that while the global economic recovery is still fragile, it is on firmer grounds. After an unprecedented 2.2-percent decline last year, global economic output is expected to grow by 2.7 percent this year and accelerate modestly to 3.2 percent next year. Teves has been reluctant about spending in the face of a widening budget gap that was exacerbated by poor revenues and state failure to sell big-ticket assets. Teves sent signals on Monday that the earlier the special spending program will end, the better for the economy. He cited efforts to sell more state-owned assets in the second quarter to supplement tax collections, particularly the 103-hectare Food Terminal, Inc. property in Taguig City for at least P10 billion. Teves earlier said the sale of three state assets — estimated to add P30 billion to the effort to trim this year’s budget shortfall — had been pushed back to the second quarter. These include the FTI property, the government stake in the Philippine National Oil Co.-Exploration Corp. and the lease deal for a prime property in Fujimi, Japan. The government wants to privatize the three assets as it tries to keep its budget deficit at P293-billion this year. It has tried a number of times to auction off all three — the last time at the end of last year — but failed due to poor market conditions and lack of investor interest. Last year’s failure to sell the assets contributed to a record P298.5-billion deficit. Teves said the Privatization Management Office had been negotiating with at least three parties for the FTI property, which Government Service Insurance System (GSIS) President and General Manager Winston Garcia wanted to buy for P7 billion. Teves said the GSIS continues to pursue the property for its members, but declined to share more details. — NPA, GMANews.TV