Scrutinizing the election-year budget (Business Mirror (Philippines))

Malacanang is strongly disputing insinuations that the P3.002-trillion 2016 budget, as well as the projected multi-billion savings from the current year’s national budget, would be used to bankroll the campaign of Aquino administration-backed candidates in next year’s national and local elections.

But the Palace cannot blame its detractors for pouncing on a general appropriations bill that is 15.2 percent higher than this year’s P2.606-trillion budget when the administration will only stay in power for half of 2016 and with pork-like insertions present in the new budget proposal.

For them, a close scrutiny of the election-year budget is a must to guard the people’s purse and to make sure local and national posts in the 2016 polls would be disputed in a level playing field.

Designed for corruption

Party-list Rep. Terry L. Ridon of kabataan put in bluntly-the national budget for 2016 is intrinsically designed for corruption and ramped-up election spending.

Of the P3.002-trillion proposed national budget for 2016, about P648.2 billion, or 22 percent, can be considered pork, according to Ridon.

When we say pork barrel, it’s not just about post-enactment identification of projects. We can classify as pork every item that is vulnerable to corruption and political maneuvering, and funds of which the manner of allocation and disbursement are left to the sole discretion of the President and the Executive department he leads, thereby leading to the funding of programs and projects that favor his select allies, Ridon explained.

Our team exhaustively analyzed 5.8 million cells of data in the 2016 National Expenditure Program [NEP], and we have come to the conclusion that-at the bare minimum-about P648.2 billion falls under our definition of pork. This means about P2 out of every P10 in our national budget next year is highly vulnerable to corruption and patronage politics, the legislator added.

Public trust on the line

But Palace spokesmen assert that the track record of President Aquino’s five-year incumbency has not been associated with misuse of public funds and it is not likely to risk losing hard-earned public trust and confidence by bending the rules to accommodate political allies seeking election to public office.

International confidence on the robust performance and prospects of the Philippine economy is at an all-time high, Communications Secretary Herminio B. Coloma Jr. noted, adding, Such confidence is anchored upon a high level of trust in President Aquino’s personal integrity.

He recalled that since 2010, Mr. Aquino has steadily built a platform of good governance characterized by openness, transparency and accountability. Hence, he is urging the Filipino people to continue choosing the righteous path [daang matuwid] so that the reforms that have been instituted will be brought to their full fruition.

According to Coloma, it is against the solid panoply of achievement that critics and detractors of the administration are now crafting gloom-and-doom scenarios in a thinly veiled attempt to misdirect and mislead the people in fanning fears that public funds would be diverted to the campaign of pro-administration Liberal Party (LP) bets in next year’s polls.

The specter of reckless government spending and diversion of public funds to partisan political activities has been raised. A system of checks and balances is in place. Recall that it was a special audit of the Commission on Audit [COA] that exposed the massive misuse of Priority Development Assistance Fund [PDAF], or pork barrel, that took place in 2008, as well as the alleged embezzlement of funds from the Malampaya oil revenues, he said.

But like the Congressional Policy and Budget Research Department, many people, including lawmakers, are asking, is the government spending the annual funds for undertakings that are responsive to their needs? Is the government efficient and not wasteful in its spending? And are the people getting value for their money?

Special Purpose Fund

Ridon noted that despite the fact that President Aquino’s term will end by June 2016, next year’s P3.002-trillion national budget is more than double than 2010’s P1.541 trillion.

Particularly, the lawmaker noted the sharp increase in the budget allotted to the Special Purpose Fund (SPF) for 2016, the portion of the budget which various public-finance watchdogs have invariably identified as a big red herring due to their discretionary nature.

The SPF is under the sole discretion of the President.

Of the P648.2-billion pork, P430.4 billion are from SPF, while P217.8 billion are lump sums stashed in 38 national government agencies and executive offices.

For 2016 the SPF increased by 75.2 percent, from P245.7 billion in 2015 to P430.4 billion. More glaringly, the lump sum portion of SPF is set to increase by 101.7 percent, from the current P48.3 billion to P97.4 billion, Ridon said.

House Independent Bloc Leader and Lakas Rep. Ferdinand Martin Romualdez of Leyte said the lower chamber should examine carefully the hundreds of billions of SPF of the Office of the President and other lump sum appropriations that could be included in next year’s national budget that are left unscrutinized and unchecked over the years.

It’s our role to scrutinize the national budget for next year to guarantee that no funds are misused. We will dissect and analyze the contents of the national expenditures, Romualdez said.

Presidential Social Fund

Nationalist People’s Coalition Rep. Sherwin Gatchalian of Valenzuela also calls for more transparent accounting of President Aquino’s P500-million intelligence fund, as well as the more than P2 billion in Presidential Social Fund (PSF).

In deference to the President, Gatchalian said the House of Representatives and the Senate do not inquire into how the Chief Executive uses his confidential and intelligence funds. But hesaid it would do Mr. Aquino well, particularly his daang matuwid campaign, if Malacanang would exercise transparency, since the intelligence fund and the PSF are also taxpayers’ money. It would be a good legacy for P-Noy’s tuwid na daan if, during his last 10 months in Malacanang, a more transparent accounting of his PSF and intel funds will be made by Palace officials, he said, noting that with the 2016 presidential elections just around the corner, transparency is important to douse suspicions that the PSF will be used for the campaign of the administration candidates.

The PSF can be considered as a presidential pork barrel since its disbursement is known only to Malacanang and does not undergo the usual post-audit scrutiny of the Commission on Audit. This makes it susceptible to fund misuse, especially now that elections are coming up, the lawmaker added.

The PSF is mainly sourced from the Philippine Amusement and Gaming Corp. (Pagcor) and the Philippine Charity Sweepstakes Office (PCSO). While the two government-owned and -controlled corporations (GOCCs) undergo COA scrutiny, their contributions to the PSF do not. As a rule, the COA just accepts the Malacanang report on PSF disbursement in deference to the President.

Annual remittance of Pagcor to the PSF is around P2 billion, while PCSO’s is around P900 million. Amount remitted to PSF is net of the two GOCCs’ salaries and monthly operating expenses, plus the 23-percent tax being paid to the Bureau of Internal Revenue (BIR).

The P500-million presidential intelligence fund is under the item Presidential Anti-Organized Crime Commission (PAOCC), which is headed by Anti-Crime czar and Executive Secretary Paquito N. Ochoa Jr.

The P500-million PAOCC budget started in 1999 under the administration of former President Joseph Estrada, and a portion of this budget was used to fund the operation of the now-defunct Presidential Anti-Organized Crime Task Force, then headed by former National Police Director General Panfilo M. Lacson, who later became a senator.

It’s about time that Congress, which has the power of the purse, makes a scrutiny of the PSF and the P500-million intel fund to determine if these funds are being spent wisely by the Aquino administration, especially at a time when elections are just around the corner, Gatchalian said.

Based on his budget proposal, President Aquino will have P250 million for confidential expenses and another P250 million, for intelligence expenses next year. He is only required to submit to the COA a certification stating in very general terms the purpose for which the money is used.

The P500 million is part of the nearly P2-billion appropriation for maintenance and other operating expenses (MOOE) for the Office of the President (OP).

The OP budget will increase by more than P200 million to P2.86 billion next year from P2.602 billion this year . This does not include the more than P2 billion worth of PSF, which is basically a presidential pork barrel.

Support Fund

Ridon also noted the conspicuous increase in the lump-sum Local Government Support Fund (LGSF), which increased more than four times from the current P3.1 billion to P18.4 billion in 2016. According to the 2016 NEP Program, the LGSF will be used to support various priority programs and projects of LGUs [local government units], implement bottom-up budgeting projects, and rehabilitate and upgrade provincial roads.

The sheer size of the LGSF alone is suspect. This is essentially a fund that the administration will use to strengthen its grip and influence in LGUs ahead of the 2016 presidential elections, Ridon said.

He noted the 29-percent increase in the government’s infrastructure outlay, which is set at P766.5 billion, of which P268.4 billion is allocated for the paving of 31,242 kilometers of roads.

The increase in the infrastructure outlay is no doubt related to the upcoming polls. For the common Filipino, one signal of the upcoming elections is the untimely rebuilding of national and arterial roads. It is not a secret to the people that many corrupt politicians get kickbacks from these road projects, he said.

With the government seeking to pave 31,000 km of roads next year, don’t be surprised if the recently paved road in your neighborhood gets excavated and repaved in the months leading to elections, Ridon added.

Also, Ridon said, despite the abolition of PDAF, or the there are still many ways in which government officials can dip their hands into public infrastructure funds under the 2016 budget.

For example, the P32.7-billion budget for irrigation under the National Irrigation Administration [NIA] is divided into several lump sums that have yet to be disaggregated. There is also a special provision in the said budget that allows for post-enactment modification of project details, giving ample room for corrupt practices and insertion of pork projects, Ridon said.

The same could be said for the P7-billion budget for farm-to-market roads under the Department of Agriculture (DA) next year, he said.

Ridon added that there are many other lump-sum allocations for various programs and projects of several agencies, including the Department of Public Works and Highways, that are highly vulnerable to corruption.

Flipping through the pages of the 2016 NEP, one can readily see traces of pork barrel. It’s practically everywhere, he added.

38 government agencies

Ridon said about P217.8 billion is also stashed in 38 national government agencies and executive offices for programs and projects that are lump sums, lack details for implementation, and can be subject to political maneuverings.

Budget Secretary [Florencio] Abad purports that there is no pork in the 2016 budget. But if we look at the line items, many lack details for implementation and are highly vulnerable to corruption, Ridon said.

Mar’s commercial

Meanwhile, Party-list Rep. Carlos Isagani Zarate of Bayan questioned the sources of campaign funds of LP standard-bearer Manuel A. Roxas II, secretary of the Department of the Interior and Local Government (DILG).

President Aquino is the chairman of LP. It seems that they are really bent on building up a more masa image for Mar Roxas, as his face is conspicuous on TV morning shows and with all his campaign ads on TV. But it makes us wonder where Mar Roxas is pulling all the money from. Fifteen seconds on a prime-time commercial spot can go upward from P250,000, while 30 seconds on TV can go upward from half a million. His TV placements early in the game makes questioning his fund sources a valid point, Zarate said.

The budget was described as an elections budget, as it was padded here and there to provide the administration substantial fuel for their campaign train. The DILG, for example, with Roxas in the stern, has a whopping P154.5-billion budget this year. The government cleverly crafted the budget to service the allies of the administration, Zarate added. Are we seeing the people’s money in the campaign ads of Mar Roxas?

Zarate said the large sums of money in strategic departments and the revolving definition of savings go hand in hand in ensuring money for LP campaign kitties. We saw it last year and we see it again in the budget deliberations this year how the Executive is pooling funds in LGUs and in LP allies in the bureaucracy.

Funds for LGUs increased fivefold in the 2016 National Expenditures Program, because it is common knowledge among politicians that LGUs, up to the barangay level, are the base in ensuring electoral victories for national candidates, especially in presidential races, Zarate said.

Scrutiny

Gatchalian, meanwhile, said daang matuwid should be strictly observed in the next 2016 elections. That means the GAA [General Appropriations Act] cannot be used for anyone’s personal campaign expenses. That’s not fair. Congress should scrutinize every lump sum and every detail of the proposed budget for next year to prevent abuse and corruption, he said.

Party-list Reps. Jonathan dela Cruz of Abakada and Antonio Tinio of ACT of teachers also vowed to scrutinize the budget of every government agencies.

Of course, it may be used for election. It has to be said that the only way that the LP was able to build itself up from a minor party with a handful of members at the start of the Aquino administration is through deft use of government programs and projects funded by the national budget as pork barrel, particularly for winning over legislators and local government officials. Certainly, we’ll see more of this in the coming months, he said.

Party-list Rep. Sherwin Tugna of Cibac urged the public to be vigilant on the budget process. Due to this possibility [misusing the public funds], it is with more reason that legislators and the public should scrutinize the budget hearing and its corresponding implementation more stringently. Make sure that all and 100 percent of public fund is spent in the project. House Speaker Feliciano Belmonte Jr. said all the lawmakers are free to scrutinize the proposed 2016 national budget.

Also, House Committee on Appropriations and LP Rep. Isidro Ungab of Davao assured all the lawmakers-allies and non-allies-of a free and independent discussion of the proposed budget at the committee and the plenary levels. We will allow congressmen to make full debates¦they can question any item, they can question any page of the proposed budget.

House Committee on Trade and Industry Vice Chairman and LP Rep. Anthony del Rosario of Davao del Norte, and LP Spokesman Rep. Ben Evardone of Eastern Samar believe that President Aquino will not allow anybody to use the national budget as his or her campaign funds.

The 2016 budget is very transparent. More important, the projects and programs are based on need and not on party affiliation. It is a budget that is anchored on the daang matuwid agenda of fighting corruption, strengthening the country’s macroeconomic fundamentals and ensuring inclusive growth, so that no one is left behind, del Rosario said.

Evardone said: I am very confident that President Aquino will not allow that [the use of public funds as campaign kitty], we saw that during the midterm elections, how much more in the upcoming 2016 elections. He wants to leave a legacy of good governance and wise spending of people’s money.

Additional safeguards

Coloma also assured that additional safeguards have been put in place in the aftermath of the Supreme Court decision on the proper use of budgetary savings. Most important, an enlightened and vigilant citizenry is actively monitoring the government transactions that are regularly posted in web sites, the Palace official said.

Coloma assured that the Aquino administration is working closely with the leaders of Congress to ensure the timely enactment of the 2016 national budget so that it may be implemented on the first day of the year, just like the budgets from 2011 to 2015.

The proposed NEP totaling P3.002 trillion, he added, is described as a legacy budget, as it prioritizes investment in people, infrastructure and socioeconomic development.

Our bosses can rest assured that government spending will be judicious and beneficial; all disbursements will be aboveboard and in accordance with law. The Aquino administration is determined to bequeath to its successor sufficient resources for effective governance, as well as for responding adequately to calamities and contingencies that may arise during the second half of 2016, Coloma said.

Palace Spokesman Edwin Lacierda, for his part, cited elections held under Mr. Aquino’s term to drive home the Palace line, noting the 2016 elections will be no different than the 2013 midterm elections.

This [2016 polls] is going to be the second one, right? The first one was during the 2013, the midterm elections. The President answered this already very categorically: ‘In 2013 I never used it. So, public funds were not used in 2013 [campaign of administration bet], what do you expect? Why would we use it[in the next elections]?,’ he asked.

Election ban

Finance Undersecretary and chief economist Gil S. Beltran said the procurement ban that will be automatically imposed at the onset of the election period would prevent the government from spending more than it should.

Under the Omnibus Election Code, public officials, including officials of GOCCs, are not allowed to disburse public funds during the 45 days before a regular election, except for the following:

Maintenance of existing and/or completed public-works project; work undertaken by contract through public bidding held, or by negotiated contract awarded, before the 45-day period before election; payment for the usual cost of preparation for working drawings, specifications, bills of materials, estimates and other procedures preparatory to actual construction; and emergency work necessitated by the occurrence of a public calamity.

The intent of such a provision in the law is precisely to prevent those in power to use public funds to gain favor from those who will be benefited by the disbursements of such funds.

Beltran added that it is customary during transition periods for the current administration to spend only half of what is allocated by Congress for the whole year, leaving behind some cash for the incoming administration to spend for its projects.

Usually, during transitional periods like next year, the outgoing administration spends only a half of the year’s budget. The election ban puts a brake on spending. Former Budget Secretary Benjamin E. Diokno agreed that the 45-day election ban will prevent the administration from undertaking last-minute and low-priority projects that would benefit its candidates. He said the procurement process would take at least six months before a contractor can be obtained for one project.

They can bid it out now, pero hindi rin pwede ‘yun kasi wala pa namang appropriations eh, ano’ng gagamitin nila? Diokno said.

Ateneo de Manila University economist Alvin Ang also said given the battle cry of the Aquino administration for good governance, the LP-led government would not want to taint its name, especially at this time.

Ang said the mere fact that the current administration has had underspending problems since it took office in 2010, say a lot about its spending priorities.

I think very careful lang talaga sila kaya I doubt it na gagamitin ‘yan for other purposes. That’s the reason they are very careful, so I don’t think na gagamitin ‘yan for campaign, Ang said.

Funding sources

However, economists admit that there are problems that may come with a budget that increased by 15.2 percent compared to the previous P2.606-trillion national budget.

Diokno and Ang agreed that issues include the ability of the current government to spend in such a short period of time. The delays that it experienced in the past few years only highlight the difficulty of the current government to increase its spending for such items, as infrastructure.

Diokno added that other problems with a large budget is the revenue cover that will be required to support the projects and programs that need to be financed.

He said apart from having a history of underspending, the Aquino administration has also had a history of undercollection. Diokno doubts whether the BIR and the Bureau of Customs will be able to collect funds enough to finance a P3-trillion budget.

Further, Diokno said with expectations that the government’s growth target of 7 percent to 8 percent will not be met, personal and corporate income taxes to be collected may be lower than expected. The former budget secretary also said the continued decline in oil prices, which is providing a boost to consumption spending, is causing the government’s excise-tax collections to decline.

With a low budget cover, Diokno said the country’s incoming budget secretary could be in a very powerful position to choose which projects can be funded, or not.

Kung malaki ‘yung budget na in-allocate sa kanya, maliit naman ‘yung revenue, then the budget secretary has a leeway, he can pick and choose kung anong i-re-release niya, ano ang hindi niya i-re-release, that makes the budget secretary powerful again. Mag-che-cherry pick siya, Diokno said. I think the congressmen and senators should be aware of this. ‘Wag naman masyadong malaki ‘yung slack, or the budget secretary will be, in effect, choosing which projects to fund and which projects not to fund. Ang also said that if the country’s revenues would be insufficient in financing the budget, the next government may find it necessary to go to the debt markets.

But, Ang said, the main issue with the budget is very basic: whether the government-the current one and the next-could and will be able to spend the money.

The government’s underspending has been a factor in the country’s lower-than-expected gross domestic product (GDP) growth since 2010.

In the first quarter of 2015, GDP grew only 5.2 percent on the back of the decline in public spending, particularly for infrastructure.

Senators divided

The BusinessMirror asked 11 senators to comment on the P2.606 trillion budget for 2016-the largest in the country’s history-which would be implemented during a crucial presidential election and, as expected, the legislators’ answers hew closely along party lines.

Notwithstanding that the budget contains suspicious lump-sums that critics said would be conveniently used in next year’s elections to buy votes, Sen. Franklin M. Drilon said: It is important that we keep on expanding the economy.

How about suspicions that part of the budget would be used to buy votes in the next election? There’s no basis, those are only suspicions, Drilon said.

Nationalista Party Sen. Ferdinand Marcos Jr., on the other hand, said the opposition is concerned about the huge lump-sums.

We’re still worried about the lump-sums. Napakalaki, na kahit ‘yun ang ipinangako ng Department of Budget and Management [DBM] na ipapaliwanag daw nila, hanggang ngayon ay wala pa, kaya nang magsimula ang hearing sa House of Representatives ay kitang-kita na hindi pa rin naibigay ‘yung itemized na list.

But we will not allow the lump-sums to go through. They need to spell out in detail what they promised, because it would be very hard to trace where the money will go, he said.

LP Sen. Loren Legarda said: I will scrutinize the budget, and I will help so that all those [lump-sum] concerns could be raised.

But I cannot answer that [suspicions of the lump-sums being used to buy votes] because I am not the implementor of the budget, she added.

Vicente Sotto III, Majority Floor leader and and a member of the NPC, said the opposition will subject the budget to a fine-toothed comb. Ano ba’ng nakita natin at napala nitong taong ito na kailangan pang dagdagan para sa susunod na taon.

Sen. Paolo Benigno Aquino IV, the youngest senator of the 16th Congress and the president’s ally in Team Pinoy, said there’s always the suspicion that part of the budget would be used for election-related purposes.

But, at the end of the day, if you fulfill your budget, you are providing services to the people. If the administration is good, you are able to provide services, that’s a by-product, having a good plan of governance. Hindi mo naman pwedeng sabihin ‘wag nating pondohan yung importanteng bagay kasi may eleksyon, di ‘ba?

It’s one of those things na damn if you do, damn if you don’t, talagang bibigyan ka ng kulay. But, I think, what’s important as you go through the process is that, nasasagot nung budget ‘yung pangangailangan ng bayan at ‘yun naman talaga ang trabaho namin, to make sure na nasasagot ‘yung mga bagay na iyan, he added.

Opposition Sen. Joseph Victor G. Ejercito of the Partido ng Masang Pilipino said they have to make sure that there will be minimal lump-sums or insertions in the budget.

We have to practice transparency because, after all, that’s the thrust of governance, of daang matuwid by the President. They should adhere to this principle of transparency and accountability. As a member of the minority, I’ll make sure there will be minimal lump-sum inclusions in the budget.

He said that every election year, the budget really balloons, so we want to make sure that some programs, or projects like the CCT [conditional-cash transfer], would not be used for political purposes.

Ejercito said it was his personal experience in 2013, running as an opposition candidate in San Juan, where some local officials discouraged him by saying: Naku, mahirap kayong manalo, kasi kakagaling lang dito ng kabilang partido, namigay ng CCT [It would be very difficult for you to win, people from the other party just came here, distributing CCT].

On the other hand, Sen. Aquilino Pimentel Jr. was noncommittal, not having seen a copy of the proposed budget. Hindi ko pa nakita ang budget, we’ll be briefed on Wednesday and Thursday.

Ako, I don’t accept the mere passage of time as the reason for automatically increasing the budget. It must be supported by actual programs to address actual needs of the people, he added.

Pimentel said it is about time to get rid of lump-sums in the national budget. Juan Edgardo Angara said there will always be accusations against a new budget, but if you look at the budget every year, it’s always going up. So I think about it, it’s consistent with past years because the government was able to set aside money for expenditures.

Asked if contingencies would always be a valid excuse for lump-sums, Angara agrees: Oo, hindi mo naman alam kung sino ang tatamaan eh, [You wouldn’t know who would be struck by calamity].

Sen. Cynthia Villar, a businesswoman and Nationalista Party lawmaker, said she would try to see whether the budget, which she admits she has yet to see, would be used for upright purposes.

Kung maganda naman ang pagdadalhan, okay. Pero kung hindi, we’ll see what we can cut.

I have not seen the budget, but personally, I’ll give them the benefit of the doubt if it has basis; if it will be used for the purpose it was intended. We will see in the deliberations, Sen. Antonio F. Trillanes IV said.

Sen. Francis G. Escudero is also not up-to-date with the budget, professing he has not read it, but agrees that it should be the right amount since the budget is in line with infrastructure spending, which is 5 percent of the GDP. We still need to spend more and, hopefully, we’ll be able to increase it during the budget deliberations here in the Senate.

He allayed fears that part of the budget would be used to buy votes, saying, Our election laws are complete.

Spending it well

Despite potential headwinds due to possible misuse of the 2016 budget for next year’s elections, bankers are not wary about the size of the 2016 national budget. Rather, they intend to look at how quickly the funds will be disbursed and whether these will be efficiently used. The 2016 proposed budget is an economic-political issue, being tied to the coming presidential elections. But from the perspective of growth, the increased budget for 2016 would translate to faster economic growth, if spent wisely.

The increased budget is more an indication of the collection and growth efforts of the past. Again, it is one thing to have a huge budget. If it is not being spent wisely, then of course it will not translate into faster economic growth, stock analyst Luis Limlingan, head of Business Development at Regina Capital, told the BusinessMirror.

Another thing to look at is how quickly the budget gets approved, the sooner the better, of course.

Short-term effects from election-related spending will, however, boost economic growth all the way to 2016, with investment spending potentially picking up as well with expectations of a new government being more aggressive in pushing infrastructure projects, in line with other Asean countries, Metropolitan Bank and Trust Company (Metrobank) research head Marc Bautista told the BusinessMirror.

Justify insertions

Economic analyst and Political Science Prof. Richard Heydarian at De La Salle University said it’s very important for the government to dispel any speculation that it intends to use taxpayers’ money to boost the chances of its own candidates in the 2016 elections.

This, if ever true, would be a violation of the fundamental principle of electoral fairness, putting into doubt the credibility of our democratic institutions. With Aquino endorsing Roxas, who is still struggling in the polls-there are bound to be suspicions that the incumbent will use state machinery to boost its anointed successor’s chances, he told the BusinessMirror.

On top of this, the Disbursement Acceleration Program controversy has also cast a dark shadow on the DBM, so much so that the Aquino administration should double its efforts to clarify and justify the rationale for any suspicious budget insertion. Otherwise, this will affect President Aquino’s legacy as a genuine reformist.

One of the risks confronting the Philippine economy is the state of the global economies, said Chamber of Thrift Banks President and RCBC Savings Bank President Rommel Latinazo. When US interest rates begin rising again, it is expected that the large amounts of liquidity still within the system can blunt and even offset expected hikes in policy rates, as such, liquidity will keep interest rates from rising too much or too fast.

Interest rates are expected to rise more smoothly in time rather than in large jumps given that inflation expectations are largely muted and a lot of countries are actually experiencing deflationary spirals given the low price of oil and commodities, Bautista said.

He said government can be more aggressive in pushing deficit spending to promote infrastructure and development projects, as inflation expectations are well-anchored and there is a large amount of liquidity available that can be largely tapped to fund such, development, given the still low yields on government bonds.

It is not expected that such issuances will crowd out the market and unduly drive up interest rates.

Limlingan said the slower remittances, interest-rate hikes, delayed rollout of infrastructure, as well as the economic woes of the US, China and some European countries will have a strong impact on the growth of the economy. He said once the US hikes interest rates, our local currency will devalue, as foreign funds will exit because of the high cost of borrowing. On the flipside, it will become much more profitable to export goods.

He said the Monetary Board can manage borrowing and lending rates, reserve requirements, and money being circulated. The government can actually pull the levers on taxes and spending and can also look into rules for foreign and local ownership.