PNoy announces P72-B economic stimulus package

President Benigno Aquino III on Wednesday detailed the P72-billion stimulus package that he had approved to boost the country’s economy. Speaking before the Foreign Correspondents Association of the Philippines (FOCAP) forum in Makati, Aquino said the package would include a P6.5-billion support fund for local government units, for infrastructure development, poverty alleviation, "and other programs that can help their respective communities toward development." He also approved the allocation of P10 billion for resettlement and relocation of informal settlers and families in danger zones and P5.5 billion on various infrastructure projects under the Department of Public Works and Highways. "The criteria we used to choose these projects were simple. The stimulus will be spent on projects that will have high macroeconomic impact, and will help the poor. The great thing is this: we’re not borrowing any additional money to fund these projects," Aquino said. Funds from govt savings He said the funds will come from government savings and the existing borrowing program. "More than that, the effects of this stimulus package will be felt not just at the end of this year, but also in the first half of next year," he said. He said in addition to the stimulus package, the government is also diversifying products and markets by strengthening trade with China, other BRICSAM countries, and other countries in the ASEAN to make up for slowdown in United States and Europe. The Philippines is one of the ten member-countries of the Association of Southeast Asian Nations (ASEAN). Aside from China, the other major developing economies in the BRICSAM grouping are Brazil, India, South Africa, and Mexico. "The government is working overtime to make certain that we do what must be done to maintain our economy’s momentum," Aquino added.. During the FOCAP forum, the President addressed other issues like the Maguindanao massacre, the Manila hostage crisis, the proposed hero’s burial of former President Ferdinand Marcos, and even the chief executive’s love life, said a report on GMA News’ “24 Oras" newscast. Package details Department of Budget and Management (DBM) Secretary Florencio Abad said “fast-disbursing and high-impact projects" were selected for inclusion in the “Disbursement Acceleration Plan for 2012", the formal name of the stimulus package. He said the P5.5 billion to be disbursed to the DPWH will be for building and rehabilitating roads, bridges, flood control structures and other projects, many of which have been damaged in the recent typhoons. The DBM said, “these projects already have a completed program of work, and many are quick-disbursing projects below P40 million." But some of the stimulus projects are in the order of hundreds of millions and billions of pesos. According to the DBM, funds will be released for the Mindanao Rural Development Project (P919 million), the Agno River Integrated Irrigation Project (P411 million), and the Agrarian Reform Communities Project 2 (P1.29 billion). The Light Rail Transit Authority will get P1.87 billion for the rehabilitation of LRT Lines 1 and 2, including the replacement of worn-out rails, repair and rehabilitation of trains and improvement of train station facilities. The P4.5 billion for the Metro Rail Transit is earmarked for the purchase of additional train cars. Also lumped into the stimulus package is P750 million explained as “development assistance to Quezon province in line with the settlement of National Power Corp. tax liabilities." To boost economy Monetary authorities welcomed the government’s fiscal stimulus package. With the P72-billion package, the Philippine economy has a better fighting chance of expanding, Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. said. Another central bank official, BSP Deputy Gov. Diwa Gunigundo, said the fiscal stimulus package will help the government achieve the higher end of its revised economic growth targets. “If the government is able to spend as much as it has projected in terms of the acceleration program and we hit the high-end of the range, that is 5.5 percent, that is something that is noteworthy considering the uncertainties of the times," Gunigundo said. Late last month, the government had already ordered three of its line agencies to pump-prime the economy by ramping up their spending, Finance Undersecretary Gil Beltran said. Underspending’s negative effects Before the government made this move, senators had questioned the Aquino administration’s underspending in the first half of 2011, which was supposedly responsible for the economic slowdown early this year. http://www.gmanews.tv/story/228895/business/senators-question-govt-underspending-in-2011 “Underspending on the part of government... had adverse effects on the GDP, and the unemployment, underemployment data because when the government underspends, the economy generates less jobs because of lack of infrastructure spending for example," Senate finance committee chairman Sen. Franklin Drilon said after a briefing with the Development Budget Coordinating Committee. Independent groups have made similar observations on the negative economic effects of the Aquino administration’s supposed underspending. A report by the US-based investment bank Citigroup said the Philippine economy will likely grow at a slower pace this year and in 2012 because of a host of factors, chief of which is fiscal underspending. A senior economist of the Amsterdam-based ING Bank NV also observed that underspending, in the name of good governance, has cut down the country’s economic growth. — Amita Legaspi/RSJ/YA/PE/ELR, GMA News