PHILIPPINE STAR - March 23, 2008

RP ready for US recession fallout

The government is prepared to withstand the challenges brought about by a looming economic recession in the United States.

Finance Secretary Margarito Teves said the government has laid down mitigating measures to ensure that the Philippine economy would continue to grow in case the current slowdown in the US worsens into a recession.

"We continue to maintain our fiscal targets. However, we are prepared to finance additional spending if such spending is needed to counter emerging global risks that could dampen the country's growth prospects," Teves said.

The US is facing a serious economic crisis due to a credit crunch in its housing mortgage market. Investment companies are counting huge losses due to their exposure in the housing market.

Teves said that one way for the Philippines to cope is for the government to increase spending on activities and projects that would pump-prime the economy.

The priority of the government would be to finance any additional spending through revenues by improving tax collection and generating higher non-tax revenues, Teves said.

He also noted that GOCCs could be a key source of support for the National Government's pump-priming efforts.

"We are closely monitoring the developments in the US and other major markets and we are committed to doing what is necessary to mitigate the impact of a potential global slowdown on our economic growth and to maintain fiscal discipline," he said.

Asked if the government is sticking to its balanced budget goal amid its plan to increase spending, Teves said that for the moment the government has not changed its fiscal program.

"Along the way, it's possible that things could happen. We will continue to monitor this…We need to work out possible scenarios," Teves said.