Rop presentation yeb final 3 march 2012-1

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Rop presentation yeb final 3 march 2012-1

  1. 1. Good Governance for a Better Tomorrow Philippine Economic Briefing Policy Agenda, Fiscal and Macroeconomic Updates Philippine International Convention Center Pasay City, Philippines 6 March 2012
  2. 2. Agenda I. Executive Summary 3 II. Government’s Focus on Governance and Near Term Goals 4 III. Economic and Fiscal Updates Healthy, Sustained and Inclusive Economic Growth 5 Rapidly Improving Public Finances 7 Prudent Debt Management 10 Strong External Payments Position 14 Credible Monetary Policy with Strong Track Record 18 Resilient Banking System 19 Governance Reforms Have Yielded Positive Results 20 IV. Economic and Fiscal Outlook 23 V. Key Investment Areas 33 VI. Profiles of Government Officials and Speakers from the Private Sector 47 VII. Investor Relations Office Brochure 66 22
  3. 3. The Philippines: Pushing Forward on All FrontsStrong macroeconomic fundamentals and governance reforms enabled the economy to sustainits positive momentum in 2011 •Resilient and stable economic growth driven by strong domestic consumer base and growing investment •Prudent fiscal management focused on fiscal consolidation and medium-term debt sustainability •Strong external payments position supported by large foreign exchange reserves, robust overseas foreign remittances and a net external creditor balance •Credible and effective monetary policy that has ensured price stability through its proactive stance and independent approach to policy implementation •Stable banking system, which is resilient to external shocks due to low NPLs, strong prudential ratios and stable domestic funding sources •Reform-minded Administration with a growing track record of good governance, prudent fiscal and budgetary management and sustained popular support from the Filipino people Growing third-party recognition with several credit rating upgrades over the past two years and ongoing market appetite 33
  4. 4. An Administration Focused on Good Governance and Near-Term GoalsThe Aquino administration has made significant achievements and has set clear goals for the future “From the beginning of my campaign, I have maintained that the job of the President is composed of three things…first is the efficient allocation of resources – that as a country with a sizable debt and limited resources, we must be able to utilize these resources to the maximum benefit of our people. Second is to make certain that, as we walk the path to progress, no one is left behind… it is the government’s job to promote inclusive growth and the third is the bedrock on which the first two are built on — the idea that by curbing corruption we can reduce poverty.” - - President Benigno S. Aquino III, Feb. 21, 2012 The President’s Social Contract Priority Areas • Rapid, inclusive, and sustained economic growth • A re-awakened sense of right and  Stable macroeconomic environment, low inflation and sustainable wrong, through the living examples of our fiscal position; GDP growth of 7% to 8% for at least 6 yrs highest leaders;  Public private partnership; integrated and multimodal national transport • An organized and widely-shared rapid and logistics system expansion of our economy through a  Adequate and responsive formal education structure and program  National Health Insurance Coverage Program government dedicated to honing and mobilizing our people’s skills and energies  Communication, education and advocacy program for population as well as the responsible harnessing of our development natural resources; • Anti-corruption/transparent, accountable and participatory governance  Government Integrated Financial Management Information System • A collective belief that doing the right thing and procurement reforms; does not only make sense morally, but also translates into economic value as well; and  Enhance role of Local Government Units in the anti-corruption drive • Poverty reduction and empowerment of the poor and vulnerable • Public institutions rebuilt on the strong  Focus on comparative advantage in more labor-intensive activities; solidarity of our society and its communities  Credit access for poor;  Regional savings generation  Conditional cash transfers • Just and lasting peace and the Rule of Law; and • Integrity of the environment and climate change mitigation and adaptation  Measure to mitigate potential negative impact of environmental factors 44
  5. 5. Economy: Healthy and StableA healthy economy supported b y sustained improvements across credit metrics 2005 vs. 2010 2011 2005 2010 Difference Real GDP Grow th1 (%) 4.8 7.6 +58% 3.7 GDP Per Capita2 (USD) 1,159.1 2,131.0 +84% 2,346.8 Investm ent (% of GDP) 14.6 20.8 +42% 21.8 General Government Debt (% of GDP) 59.2 42.2 -29% 40.13 External Debt (% of GDP) 52.7 30.1 -43% 28.44 OF Rem ittances (USD bn) 10.7 18.8 +76% 20.1 Current Account (% of GDP) 1.9 4.5 +137% 3.14 Gross International Reserves (USD bn) 18.5 62.4 +237% 77.45 Source: Bangko Sentral ng Pilipinas (“BSP”), National Economic and Development Authority (“NEDA”), Department of Finance (“DOF”) 1/ At constant 2000 prices 3/ Preliminary Q1 2011 data 2/ At current prices 4/ For Jan – Sep 2011 5/ As of Jan 2012 55
  6. 6. Economy: Healthy and Stable A stab le economy highlighted b y continued positive growth 52 consecutive quarters of positive GDP grow th since 1999 Relative stability m easured by GDP volatility (2000 – 2010) 8 2.6 Real GDP growth ranked by mean 7.6 16.0% 7 6.7 2.4 6.6 12.0% 6 2.2 5.2 5 5 4.8 2 8.0% 4.4 4.2 4 3.7 1.8 3.6 4.0% 3.1 2.9 3 1.6 0.0% 2 1.4 1.1 (4.0%) 1 1.2 (8.0%) 0 1 China Malaysia Turkey Brazil Indonesia Thailand Philippines 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Real GDP Growth Rate (LHS) Nominal GDP Per Capita (Rebased to 1999=1, RHS) Hi / Low Real GDP Growth Mean Real GDP GrowthSource: National Statistical Coordination Board (“NSCB”),IMF World Economic Outlook (“WEO”) Database for 2000-2010 GDP data for other countries 66
  7. 7. Government Reforms: The Focus on Good Governance Good governance agenda with emphasis on fiscal discipline, transparency and accountability Key Reforms Instituted by the Administration  Prudent fiscal controls coupled w ith intensified revenue collection efforts over the past year have laid the framew ork for efficient budgetary allocation in 2012  Tax reform m easures including the indexation of sin taxes (alcohol and tobacco product taxes) and the rationalization of fiscal incentives aim to further improve the fiscal position  Tighter prioritization of expenditures through the Zero Based Budgeting approach, improved composition of expenditures and quality of government services  Rigorous im plementation of RATE, RATS, RIPS programs to go after evaders, smugglers, corrupt officials, respectively, have improved tax collection  Contracts and public tenders are now posted on public w ebsites to instill transparency in the procurement process  Set-up BIR key performance indicators and publish actual results; establish appropriate performance standards and evaluations  Enacted the GOCC Governance Act of 2011 w hich lays the groundw ork for enhanced discipline in GOCCs  Set up the Debt Managem ent Office at the Department of Finance w hich is tasked to formulate and oversee the implementation of the Republic’s debt management strategy Transparency and Fiscal Discipline AccountabilitySource: BSP 77
  8. 8. Fiscal Reform Under the Aquino Administration Getting on a sustainab le fiscal path with improving fiscal metrics Strict im plementation of adm inistrative reform measures Actual at the BIR and BOC to im prove revenue generation Run After the Tax Evaders Program (“RATE”) 2008 2009 2010 2011  RATE is a program initiated by the Department of Finance (“DOF”) and Bureau of Internal Revenue (“BIR”) to investigate and prosecute individuals or entities engaged in tax evasion Rev enues (% of GDP) 15.6 14.0 13.4 14.0  RATE is enhancing voluntary compliance and promoting the confidence of the public in the tax system  87 tax evasion cases filed as of Jan 31, 2012 with total tax liabilities of P36.1 billion Rev enue Grow th (%) 5.8 (6.6) 7.5 12.6 Run After the Sm ugglers Program (“RATS”)  RATS is a vigorous campaign against smugglers that was launched in 2005 Expenditures (% of GDP) 16.5 17.7 16.9 16.0  Revitalized RATS program zeroes in not only on smugglers but even on Bureau of Customs (“BOC”) officers and personnel who may be involved in illegal operations Fiscal Balance (% of GDP) (0.9) (3.7) (3.5) (2.0)  66 smuggling cases filed as February 15, 2012 with total dutiable value of P59.7 billion Revenue Integrity Protection Service (“RIPS”) General Gov ernment Debt 44.2 44.3 42.2 40.1 1  RIPS was created to address persistent reports of corruption in (% of GDP) revenue generating agencies of the government that lead to collection shortfalls  29 cases filed with the Office of the Ombudsman involving 31Source: NSCB, Bureau of the Treasury (“BTr”)1/Preliminary Q1 2011 data government personnel 88
  9. 9. National Government’s Fiscal Consolidation Efforts on Track Fiscal performance further solidifies under the Aquino Administration National Governm ent’s P197.8 billion deficit in 2011 w as 37.1% low er than last year Revenues Expenditures Surplus/(Deficit) 2,000 (3.7%) of GDP 1,522 1,558 1,600 1,360 1,422 1,123 1,208 1,200 (3.5%) of GDP PHP Billions 800 (2.0%) of GDP 400 0 (400) (299) (198) 2009 2010 2011 (315)Source: BTr 99
  10. 10. Prudent Debt Management Domestic / foreign b orrowing mix effectively managed Prudent strategies to finance the annual funding requirement m inimize foreign exchange risk and increase funding self-sufficiency National Government Gross Financing 5.9% 10.9% 100% 14.2% 34.2% 26.6% 80% 35.5% 28.5% 45.3% 43.4% 43.8% 22.4% 60% 40% 85.8% 73.4% 65.8% 64.5% 65.6% 66.7% 54.7% 56.6% 56.2% 20% 0% 2003 2004 2005 2006 2007 2008 2009 2010 Jan-Nov 2011 Global-Peso Notes Foreign Domestic External com ponent of National Governm ent debt has been gradually declining over the years 2003 2006 2010 44.1% 42.4% 49.2% 50.8% 55.9% 57.6% Foreign DomesticSource: DOF, BTr 10 10
  11. 11. Improving Debt Sustainability Proactively managing the liability profile The National Government’s foreign and domestic debts have grown longer dated over time Domestic Debt 2003 2005 2010 Jan – Nov 2011 10%  Reduced rollover risk 29% 19% 27% 29% 29% and increased debt carrying capacity over 20% the past ten years 27% 70%  Debt portfolio has 54% become significantly 44% 42% longer in tenor Foreign Debt  New issue yields 2003 2005 2010 Jan – Nov 2011 decreasing and 10% 4% foreign currency- denominated bonds are receiving a substantial bid from onshore investors 90% 96% 100% 100% Short term – 1 y ear or less Medium term – bey ond 1 y ear but less than 10 y ears Long-term – bey ond 10 y earsSource: DOF, BTr 11 11
  12. 12. Demonstrated Ability to Service Debt Comb ination of improving debt metrics and external b alance sheet strength External debt is supported by growing current account receipts Am ple reserves to cover debt service burden Improving external debt ratios underpin the country’s strengthening external payments position 140% 14 11 5.5% 1 13 .6 % 1 09.6 % 102 .8% 120% 12 98.3% 9 3.4% 9 0.7% 8 9.9% 100% 10 77 .0 % 76 .1 % 7 0.0% 68.1% 67.7 % 80% 8 60% 6 40% 4 20% 2 0% 0 Jan- Nov 2 010 Jan- Nov 2 011 Ja n- Sep 201 0 Ja n- Sep 201 1 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 External Debt / Current Account Receipts GIR / Debt Service BurdenSource: BSP, BTr 12 12
  13. 13. Demonstrated Ability to Service Debt (cont’d) Comb ination of improving debt metrics and external b alance sheet strength External debt ratios have declined significantly over the last 6 years Revenue allocated to debt service has declined drastically 90  40%   80 35%      70  30%   60    25%   50  20% 40      15% 30 20 10% 10 5% 0 0% Jan-Sep 2010 Jan-Sep 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 2011 External Debt / GDP NG Interest Payments / NG RevenueSource: BSP, BTrDebt servicing costs are for national government data and cover interest payments 13 13
  14. 14. Strong External Payments Position BOP supported b y rob ust growth of remittances and BPO revenues Rem ittances have tripled in a decade 24 7 consecutive years of balance of paym ents surplus 22 20.1 20 18 .8 17.3 18 16.4 USD Billions 20,000 16 14.5 14 12.8 14,308 12 10.7 10 8 .6 15,000 7.6 8 6.9 6.0 10,179 6 8,557 4 USD Millions 10,000 6,421 2 0 2001 2002 2003 2004 2 005 20 06 2007 20 08 200 9 2010 2011 3,769 5,000 OFW Remittances 2,410 89 BPO revenues continue to grow rapidly -202 810 115 0 14 12 10.9 -280 10 8.9 USD Billions -5,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 8 7.1 6.1 6 4.9 Current Account Capital + Financ. Account Other BOP Position 4 3.3 2.4 2 1.5 0 2004 2005 2006 2007 2008 2009 2010 2011E BPO Rev enuesSource: BSP 14 14
  15. 15. Growing Foreign Exchange ReservesThe growing stock of FX reserves shields the economy from external shocks Foreign exchange reserves continue to grow at a record high  The Philippines is now a net external creditor; foreign exchange reserves of US$77.4 billion more than covers the country’s total external debt as of September 2011 of US$62.4billion  As of end-January 2012, the country’s foreign exchange reserves could cover 11.4 months worth of imports of goods and payments of services and income  At this level, reserves are equal to 10.8 times the country’s short-term external debt based on original maturity  Foreign exchange reserves continue to provide a healthy buffer from external shocks 11.1 11.4 80 12 70 9.6 10 8.7 60 USD Billions 8 50 6.0 5.8 40 77.4 6 75.3 4.2 62.4 x 30 4.0 3.8 4.0 3.6 4 20 44.2 37.6 33.8 2 10 23.0 16.4 17.1 16.2 18.5 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jan-12 FX Resrves (LHS) Import Cover (RHS) Source: BSP 15 15
  16. 16. Strong External Position is Supportive of the Peso The Philippine Peso is stab le relative to currencies of other emerging market economies The Peso has remained stable in recent years Peso m ore stable than peers’ currencies 3 Months Realized Volatility 55 160 53 140 51 120 49 47 100 45 80 2010 Av g: 43 PHP45.1/USD 60 2011 Av g: PHP43.3/USD 41 40 39 20 37 35 0 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Philippine Peso Turkish Lira Indonesian Rupiah South African Rand Thai BahtSource: BSP, Bloomberg 29 December 2011 16 16
  17. 17. External Position is Supported by Moderate Exposure to EU Headwinds Limited reliance on EU markets shelters the economy from external b oom-bust cycles Financial sector risk from EU exposure is limited Lim ited trade and financial dependence on EU  The banking sector continues to fund itself primarily 2010 2011 2011 Actual Value through domestic deposits eliminating the need for Exports to EU / Total Exports 14.4% 12.3% US$5.89bn external financing Imports f rom EU / Total Imports 7.2% 7.4% US$4.45bn  Domestic banks have limited exposure to EU assets, mitigating the potential impact from NPLs or Net EU FDI / Total FDI 1 -9.1% -39.2% -US$0.31bn financial instrument contagion OF Remittances from Europe / 17.0% 16.6% US$3.3bn Total Remittances 2  Local banking system’s consistently improving asset 1/ Period covers Jan-Nov quality, good liquidity and favorable capital profile serve 2/ 53.0% of all remittances come from the Americas, 16.6% from Europe, 16.0% as a buffer to external and domestic shock from the Middle East ,12.8% from Asia, and 1.6% from other regions The econom y is less susceptible to Lim ited im pact of global economic shock on real economy trade shock than other EMs Trade Openness 2010: Higher number indicates more vulnerability 2009 GDP Growth Shock to trade shock ST DEV 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Malaysia Turkey 7.5 Taiwan Malaysia 5.3 Thailand Thailand 5.3 Philippines Taiwan 4.5 China Philippines 3.1 Indonesia China 1.5 Turkey Indonesia 0.7 0 20 40 60 80 100 Growth Shock: Standard deviation seen in 2009 GDP growth Trade Openness: Sum of US dollar value of current account transactions as % of GDP compared with the preceding five-year average growth rateSource: BSP, IMF WEO Apr 2011 release, Fitch Sovereign Data Comparator Dec 2011 17 17
  18. 18. Credible Monetary Policy Refinements in the inflation targeting framework has allowed the BSP to meet its inflation target for 3 consecutive years The Republic has achieved the right policy balance between containing inflation and supporting economic growth 14 Global inflationary cycle 12 10 8 January 2012 6 4 3.9 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Headline Lower Bound of Target Upper Bound of Target Liquidity and dom estic interest rates remain supportive Dec 2011: 5,000 P4,674bn 14 4,500 4,000 12 3,500 10 PHP billion 3,000 2,500 8 % 6.1% 2,000 1,500 6 1,000 4 500 4.5% 0 2 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 M3 (LHS) Bank Lending Rates (RHS) Reverse Repurchase Rate (RHS)Source: BSP 18 18
  19. 19. Resilient Banking System Improving asset quality and strong prudential ratios underpin soundness of the b anking system Strong capitalization above international norms  Improving asset quality has minimized the risk of a potential Capital Adequacy Ratio (“CAR”) (%) banking-system led crisis 20% 17.4%  The resilience demonstrated by the Philippine banking system 18% is highlighted by the decrease in system-wide Non-Performing 16% Loans (“NPL”) and Non-Performing Assets (“NPA”) levels 14% 16.5% even at the heart of the global financial crisis 12%  NPL coverage ratios have strengthened as insurance against 10% potential future asset deterioration, and underpin the 8% conservative nature of the banking system 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 End- Jun CAR, Solo CAR, Cons olidated 2011 System -wide NPL level has show n sustained im provement While NPLs have shrunk, NPL coverage ratios have even through the global financial crisis strengthened 4,000 20 3,500.6 3,500 120 16 102.6% 3,000 100 2,500 12 80 2,000 8 60 1,500 1,000 3.1% 40 4 500 20 0 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 end- 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 end- Sept Sept 2011 2011 Total Loan Portfolio, Gross NPL Ratio NPL Coverag e Rati oSource: BSPNPA Ratio is equal to the percentage of assets that are no longer paying interest or principal as a percentage of total assets 19 19
  20. 20. Governance Reforms Have Yielded Positive Results ROP is showing improvement on several governance and competitiveness indicators 2009/2010 2010/2011* Change World Bank Governm ent Effectiveness Indicator 51 52 1 percentile Transparency International – Corruption Perceptions Index 139 134 5 places World Econom ic Forum (“WEF”) Com petitiveness Rankings Overall 85 75 10 places Institutions 125 117 8 places Macro environment 68 54 14 places Higher Education and Training 73 71 2 places Goods and Market Efficiency 97 88 9 places Technological Readiness 95 83 12 places Financial Market Development 75 71 4 places Business Sophistication 60 57 3 places Innovation 111 108 3 placesSource: World Bank , Transparency International and WEF*World Bank Governance Indicators and Transparency International values are for the year 2010 / World Economic Forum Rankings values are from the 2011/2012 report data 20 20
  21. 21. Governance Reforms Have Yielded Positive Results Progress has b een recognized by the rating agencies “The national government recorded a “The strength of the Philippines’ external “The upgrade in June reflects progress small fiscal surplus, building upon the balance sheet and fav orable grow th on fiscal consolidation against a track notable turnaround in fiscal traj ectory support the sovereign credit record of macro stability, broadly management seen during 2H 2010. Much ratings on the country. Structural fav orable economic prospects and of the improvement has been attributed to strengths of the current account strengthening external finances” the progress made in fiscal appear sufficiently w ell entrenched” consolidation by the new Aquino administration” Moo dys S&P Fi tch Baa3 BBB- BBB- Last upgraded to BB+ (June 23, 2011) Ba1 BB+ BB+ Last upgraded to Ba2 Last upgraded to BB (June 15, 2011) (November 12, 2010) Ba2 BB BB Ba3 BB- BB- S&P: Positive Outlook (December 16, 2011) B1 B+ B+ B B B B- B- B- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011Source: Moody’s, S&P, Fitch 21 21
  22. 22. Governance Reforms Have Yielded Positive ResultsLow CDS spreads and record high performance of the PSE are proofs of positive investor sentiment on the Philippines Philippines’ CDS levels are tighter than some higher rated peers 1400 Ratings CDS level as of Country (Moody’s/S&P/Fitch) 1 March 2012 1200 Brazil Baa2/BBB/BBB 135.1 Peru Baa3/BBB/BBB 140.3 1000 Philippines Ba2/BB/BB+ 155.5 800 Indonesia Baa3/BB+/BBB- 166.2 Turkey Ba2/BB/BB+ 232.2 600 India Baa3/BBB-/BBB- 283.5 400 200 0 Philippines India Brazil Peru Indonesia Turkey Philippine Stock Exchange index sustains its bullish trend 5500 4500 3500 5,016.3 pts 2 Mar 2012 2500 1500 PSE indexSource: Bloomberg, Data 22 22
  23. 23. Economic OutlookBetter economic performance expected in 2012 with all sectors contrib uting 2012 Growth Outlook 2012 Macroeconomic Assumptions (growth rate, in %, at constant prices) Actual 2012 Assumption* Parameter 2012 2010 2011 Low High GDP 7.6 3.7 5.0 6.0 Inflation Target (1) 3% - 5% GNI 8.2 2.6 4.0 5.0 FX rate (1) P42 – P45Demand Side Crude oil (1) $90 - $110 / barrel HH Cons. 3.35 6.1 4.6 5.6 Merchandise Export Growth (1) 10% Govt. Cons. 4.0 (0.7) 4.0 4.6 Merchandise Import Growth (1) 15% Investment 31.61 11.1 8.9 10.2 External Accounts Total Exports 21.0 -3.8 8.4 9.3 Balance of Payments (2) $2.8 bn Total Imports 22.5 1.9 9.7 10.4 Current Account (2) $4.3 bn Supply Side Gross International Reserves (2) $79.0 bn Agriculture (0.2) 2.6 4.1 5.0 Industry 11.6 1.9 5.6 6.6 Remittances (2) $21.1 bn Services 7.2 5.0 4.9 5.9 Remittance growth (2) 5%*DBCC approved only the GDP growth rate. Assumption details may still change. (1) DBCC approved as of Jan 25,2012; (2) Based on BSP projections as approved by the Monetary Board on 2 December 2011 23 23
  24. 24. Economic Outlook Better economic performance expected in 2012 with all sectors contrib uting Near-term Policy Directions Accelerated government spending to support domestic demand • Stimulating domestic demand • Early release of funds for infrastructure projects  Sustaining domestic consumption  72.1% or P150.2 billion allocation for capital outlays in  Securing investments 2012 has already been released to agencies like • Accelerating fiscal spending and infrastructure outlays DPWH, DA, DepEd • Diversifying domestic and external trade  Sixteen (16) projects under PPP are already in the pipeline • Strengthening economic relations with fast-growing ASEAN  Estimated cost P140.8 billion economies; seizing the opportunity from China rebalancing • More efficient and faster process due to the implementation of bureaucratic reforms in budget management and administration initiated in 2011. • Accelerated budget execution process Global and Domestic Risks to Growth  99.6% of the budget for PS and 90.4% for MOOE have already been released 1/ • External Risks  Balance sheet issues and weak consumption in the US  Fiscal problems and sluggish output in the Eurozone • Internal Risks  Weak industry output  Damages in agriculture and infrastructure due to natural calamities  Timely and effective implementation of Disbursements  Acceleration Program1/ as of January 17, 2012 24 24

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