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Macroeconomic and Fiscal Targets in 2009 Philippines Budget

Gross Domestic Product (GDP) is expected to accelerate in 2009, from 6.0 percent in 2008 to 6.5 percent from stronger growth in all the sectors. The impact of the higher oil prices will be offset by greater allowance for more spending on construction.
The agriculture sector is expected to expand by as much as 6.0 percent annually on account of its five-point program currently being implemented which focuses on
  • Market access
  • Rural infrastructure
  • Post harvest and storage facilities
  • Credit, financial and insurance support and
  • Research, development rural extension work and training 
Investments would also be intensified in 2009 as the government in partnership with the private sector continues to upgrade the country’s infrastructure. The mining, utilities, construction and transportation sub-sectors would benefit the most from these projects.The services industry is also seen to grow with strengthened tourism sector and with more liberalized air travel policies.
For 2009-2010, the economy is expected to be propelled by the private sector assisted by improved investment prospects in all sectors, Overseas Filipino Workers (OFW) remittances ad by the virtuous circle of prudent fiscal management. Hence, budget preparation shall be based on the following assumptions:
GNP Real Growth (%)
6.6 – 7.3
7.5 – 8.2
8.0 - .8.8
GDP Real Growth (%)
6.0 – 6.7
6.5 – 7.3
6.9 - 7.7
Inflation Rate (%)
4.0 – 5.0
2.5 - 4.5
2.5 - 4.5
91-day T-bill rate (%)
3.5 - 5.5
3.5 - 5.5
3.5 - 5.5
Foreign Exchange Rate
40 - 43
40 - 43
40 - 43
*2008-2010 figures are preliminary forecasts and are subject to adjustments
The growth path for 2009 – 2010 allows for increase in construction spending, to raise investments.
Investment spending the industry sector is expected to post higher growth rates to sustain the economy’s growth in the coming years. Hence, despite the worsening oil prices, growth is still expected to be higher than the old figures. The GDP will grow by at least 6.5 percent and 6.9 percent in 2009 and 2010, respectively.
It is expected that inflation will stabilize between rates lower than that in 2008. For budget formulation, the following shall be used:

For 2009 and 2010, the point of estimate to be used shall be 3.5%, the midpoint of the forecast inflation rate range of 2.5% - 4.5%.
The peso-to-dollar exchange rate is assumed to remain stable at the Peso (P) 40-Peso 43 range. On the other hand, interest rates, as indicated by the 91 – day Treasury bill rate, are projected to increase from the 20:07 rate, to range between 3.5% and 5.5%. For budget formulation, the following shall be used:
  • Exchange rate of P42:$1 for 2009 -2010.
  • Interest rate of 5.5% for 2009-2010 
The Peso 1.3 trillion projected revenues represent an 8.2 percent growth over the expected revenue collections of 2008. This projection incorporates only existing legislative measures. Consistent with the above aggregate fiscal targets, an obligation budget ceiling amounting to Peso 1.321 trillion is proposed for 2009. This budget level is higher by P84.4 billion or 6.8 percent than the 2008 programmed level.

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