Global General

Philippine govt mulls exit strategy to limit fiscal deficit

(Xinhua)
Updated: 2010-03-22 15:29

MANILA - The Philippine government may need to gradually withdraw the fiscal stimulus to limit the huge fiscal deficit, a senior economic manager said Monday.

"We have to get a sense from other countries whether an exit strategy is already in order after 2010. We're hoping the recovery this year will be strong enough so that the stimulus in 2009 and to some extent the stimulus this year will not be as needed going forward as in those two years," Philippine Finance Secretary Margarito Teves said in aublic forum on infrastructure hosted by the Asian Development Bank.

The national government has set aside 100 billion pesos ($2.2 billion) for fiscal stmulus this year to ensure that the economy would grow by as much as 3.6 percent. While this is lower than last year's 330 billion pesos ($7.2 billion) fiscal stimulus package, Teves said the impact of the flood of liquidity in the system should hopefully render future stimulus spending unnecessary.

The national government incurred a deficit equal to 3.9 percent of GDP last year or 298.5 billion pesos ($6.5 billion). For this year, the government is expecting to limit the deficit to 293 billion pesos ($6.4 billion) or equivalent to 3.5 percent of the GDP.