NEDA says government needs better fiscal position

MANILA, Philippines - The National Economic and Development Authority (NEDA) stressed the need to improve the government’s fiscal position, saying that the state needs the revenues to improve the country’s competitiveness.

Dennis Arroyo, director of NEDA’s National Planning and Policy Staff said the government needs to implement new strategies to improve the country’s competitiveness.

However, he said, the first thing to do is to improve the fiscal situation as this has been a major drag on the economy.

“After we fix that problem, we should use the revenues to catch up in infrastructure and social priorities, then nurture these 21st century industries,” Arroyo said during the recent forum on “Advocating Policy and Legislative Agenda to Improve Philippine Competitiveness for the 15th Congress.”

The government’s budget deficit is expected to swell to as much as P293 billion this year from an expected P290 billion in 2009.

The P290-billion projected for last year is above the P250- billion programmed for 2009 but lower than a previous estimate of P300 billion.

As of end-November 2009, the government’s budget deficit had already swelled to P272.5 billion, more than four times the P66.7-billion incurred in the same period last year mainly because of weak revenues.

Once the government’s revenues have improved, Arroyo said it can focus on identifying new industries that would boost the country’s competitiveness.

These 21st centures include high-value agribusiness and aquaculture, renewable energy, shipbuilding, tourism, business process outsourcing (BPO), information and communications technology (ICT), and mining.

“The most important thing is that new jobs are created by these industries,” Arroyo said.

In the area of agriculture, Arroyo said that farmers should shift from poor rice cultivation towards high-value agriculture, like palm oil, fruits, biofuel, and halal livestocks.

“Rice farming is a poverty trap because of its low yield. We should mechanize rice production and put farmers to work in high-value agribusiness,” said Arroyo.

He also said more than half of the world’s fish consumption now comes from aquaculture, or the cultivation of aquatic organisms under controlled conditions.

In the area of renewable energy, Arroyo said that the Philippines already ranks seventh in terms of the number of approved Clean Development Mechanism (CDM) projects.

As such, Arroyo urged the private sector to invest in power generation which could add to the country’s capacity.

“They could also take advantage of the tax incentives for CDM projects,” Arroyo said.

The CDM is an arrangement under the Kyoto Protocol allowing industrialized countries to invest in foreign ventures that reduce emissions in developing countries. Most CDM projects in the Philippines develop indigenous energy sources, such as wind, hydro and biomass.

Arroyo said that ocean waves have the potential for producing energy.

“Since the Philippines has the advantage of being an archipelago, there is access to power from ocean waves,” Arroyo added.