SLOW GROWTH SHOULD PROMPT ADMIN TO RETHINK FISCAL POLICY

Senator Edgardo J. Angara urged the Aquino Administration to rethink its fiscal policy in light of dismal third quarter GDP growth of 3.2 percent, down from 7.3 percent year on year.

"While it is true that we are affected by the debt crisis in Europe and the slowdown of the U.S. economy, we cannot deny that slow government spending is one of the reasons for such a disappointing performance. This is a very expensive costly wake-up call for us," said Angara, Vice-Chair of the Senate Committee on Finance.

Angara has repeatedly called on Department of Finance (DOF) Secretary Cesar Purisima and Department of Budget and Management (DBM) Secretary Florencio Abad to restrategize the 'spending-shy' government's fiscal policy.

"We need to spend at least 17 percent of our GDP to be able to address our country's many needs especially in education, health, and infrastructure, and yet we have been underspending for the better half of the year when investments and constructions should have been undertaken aggressively," said Angara.

The Philippine economy has decelerated for the third consecutive quarter, in spite of the P72 billion stimulus package released by President Aquino.

"As I said, that is too little, too late. As most Filipinos would feel by now, this has been costly in terms of human capital development: the jobs that were supposed to be created were not created, the roads that could have been used by now are all still under construction," said Angara.

In its report, the World Bank also noted the Philippines incapability to attract foreign direct investments compared to its ASEAN neighbors, grossing only US$838 million for the first half of the year, or 1 percent of the country's GDP.

Angara has earlier urged Purisima to fund an elasticity study that will serve as basis for policies on investment and finance.

Pushing for reform in financial management, Angara proposed two additional measures. "We must devolve government spending to be more inclusive of the LGU's and the private sector, and increase government revenue through the rationalization of incentives, restructuring excise tax on sin products, and road users taxes--areas that won't hurt the poor."