[Philippines] Salceda: Lower economic growth targets could worsen poverty

from INQ7

By Michael Lim Ubac

THE CHAIR of the House of Representative’s appropriations committee cautioned Malacañang yesterday against prematurely trumpeting economic gains, saying the medium-term growth target being pursued by the country’s economic managers could actually “produce more poor people at the end of the President’s term.”

Albay Representative Joey Salceda, who has President Gloria Macapagal-Arroyo’s ear on economic matters, told the Inquirer that the Development Budget Coordination Committee (DBCC) drastically reduced growth targets twice since last September.

This explained why the 5.5 percent expansion of the gross domestic product (GDP) in the first quarter of 2006 was within the government’s target, he said.

Key development

DBCC is an inter-agency body co-chaired by the director general of the National Economic Development Authority (NEDA) and the secretary of the Department of Budget and Management, with the Executive Secretary, secretary of the Department of Finance and governor of Bangko Sentral ng Pilipinas as members.

“The key economic development in yesterday’s GDP result is the two-step, one percent downgrading made in September 2005 and March 2006 in the medium-term growth target where the DBCC gave up on the 7 to 8 percent GDP for a more modest 6 to 7 percent by 2010,” he said.

Major impact

In short, he said, the country’s economic managers had originally been aiming for a growth rate of 7-8 percent for the next five years, “but we’re now looking at 6 to 7 percent.”

Salceda said the lowering of the target would have a major impact on the poverty-reduction goal of the government, which is to lower the poverty incidence from 24.7 percent at present -- or about four million families -- to 17 percent by 2010.

“That easily means poverty incidence higher than the targeted 17 percent since 90 percent of poverty reduction comes from GDP growth,” Salceda said.

‘More careful’

“That makes PGMA’s (President Arroyo’s) pronouncement (last week) of our state aspiration and racial ambition for First World status in the next 20 years seem more distant,” he added.

He said the DBCC should be more “careful” in adjusting targets.

“It easily means more poor people at the end of the plan or the President’s term. You can’t just do that without looking at the implication of the changes in the numbers,” Salceda said.

Enchanted Kingdom

He advised economic planners to give Ms Arroyo’s wish of bringing the country into the “Enchanted Kingdom of the First World” the “gravity it deserves since it is a valid national goal and, while difficult, is certainly not impossible.”

Salceda has already asked the NEDA to “restore the higher goals since they remain feasibly strategizable.”

China, India

He cited the case of China which took 12 years of 10 to 12 percent GDP growth to make an “irreversible dent on poverty,” while India had to grow 8 to10 percent for the past seven years to arrest poverty.

“The Philippines must plan for desirably ambitious GDP growth because it is a social imperative,” Salceda said. “Just because recent numbers appear behind the ideal trajectory of growth momentum, we should not give up too easily on ourselves. If that reflects the state of mind of the Executive (branch), Congress will seize the chance to assert its constitutional mandate as the chief policy-making body of the country.”