'Govt must use up huge budget for infra to spur private investments'

THE government only needs to spend all its P1.126-trillion 2007 budget and the country would be able to achieve a 7-percent economic growth for the year. It’s as simple as that according to Augusto Santos, deputy director general of the National Economic and Development Authority. There is one problem, though—the government procurement law is “very regulatory,” making it hard for the state to spend all its budget, he said. In a chance interview at the sidelines of an event at the Board of Investments building in Makati, Santos said should government succeed in spending all of its budget, the private sector “will definitely be following through with proportionate investments and spending, seeing that government is putting money on key projects, especially infrastructure.” “Easily, every P1 spent by the government could trigger P4 spending from the private sector. . . The psychology of the private sector is [to follow] if they see government spending.” He said migrant worker remittances are estimated to be at least $1 billion per month so that would be about $12 billion for the year. Add to this, he said, the projected $50 billion in exports and the country would have already solved half of the GDP equation. “If  things turn out well, we may possibly reach 7 percent (GDP).” Should government fail to spend all of its P1-trillion budget for the year, Santos said the economy is only likely to grow by about 6 to 6.5 percent for 2007. This band is higher than the official 2007 GDP projection of 5.7 percent to 6.2 percent. Usually, Santos said the government is not able to use up all its yearly appropriations because the process of spending is hindered by the strict procurement law. In 2006 for instance, the government spent only about P650 billion to P700 billion out of the P907.6-billion national budget for the year. The economy grew by 5.4 percent that year. Experts have been saying that for Filipinos across all sectors to feel the improving economy, the GDP must grow by at least 7 percent. The government responded by drawing up a strategy that could lead to a 1-percent additional yearly growth in GDP keyed by public spending over 2007, 2008, and 2009.  --M.V. de Leon

 

http://www.businessmirror.com.ph/0427&282007/headlines06.html