Government may raise 2002 targets

Expecting a turnaround in the economy in the second semester, the country’s economic managers are set on adjusting this year’s macroeconomic targets.

Department of Finance (DOF) sources said "there is an emerging sentiment among members of the economic team they can overshoot the year’s macroeconomic targets."

Thus, it is likely that the inter-agency Development and Budget Coordinating Committee (DBCC) will make the necessary adjustments by mid-year, the sources said.

The DBCC, composed of the DOF, Department of Budget and Management (DBM), Bangko Sentral ng Pilipinas and the National Economic and Development Authority, is tasked to ensure economic policies and programs of the government are properly implemented.

Subject to adjustments are key macroeconomic targets such as inflation, growth, interest rates.

The sources said the adjustments will have to reflect the higher projections of the country’s economic managers.

Previously, Socio-Economic Planning Secretary Dante Canlas said inflation might have to be trimmed to four to 4.5 percent from the original target of five to six percent this year.

Inflation, in fact, moved down to 3.4 percent last month from 3.8 percent in January or significantly lower than 6.7 percent and 6.7 percent a year ago, respectively.

Sources also noted that with the consistent monetary easing measures of the Bangko Sentral ng Pilipinas to keep key policy rates attractive vis-à-vis the rates of the US Federal Reserve Board, the assumed interest rates can even be lower than the earlier projected 10 to 11 percent.

Last week, the 91-day Treasury bill rate banks use to price commercial lending fell 6.911 percent, close to the all-time low of 6.8 percent last posted on Feb. 4, 1987.

On the other hand, the targeted gross domestic product (GDP) growth of 4.3 percent this year, will be discussed once it becomes clear the economy is picking up.

This will however, depend on the anticipated faster-than-expected recovery of the country’s biggest trading partner, the US, also the world’s biggest economy.

Earlier, Finance Secretary Jose Isidro Camacho said the country is off to a good start this year.

He noted the recent credit rating outlook upgrades given by Standard and Poor’s, the Japan Credit Rating Agency and the London-based Fitch.

Only the New York-based Moody’s Investor Service has not revised the country’s rating outlook to "stable" from "negative."

Camacho is confident however, that last week’s review by Moody‘s will yield an improvement in the country’s creditworthiness.

He added that whether Moody’s decides to upgrade Manila or not will not have much impact since the government was able to borrow from foreign creditors at costs "that mirrored renewed confidence in the near-term future of the economy."

Moody‘s earlier expressed doubts the Arroyo administration can sustain its economic gains last year.

But Camacho said: "The only concern now is whether we are able to sustain the economic gains we have achieved thus far. We should be able to demonstrate that we are consistent in terms of policies and program started last year."