ILOILO CITY-The country's economic officials yesterday assured that the increased electoral spending will not be inflationary and will not affect last year's economic growth.

But they warned that political violence, especially in the provinces and regions, could dampen the confidence of foreign investors.

Budget Secretary Rolando Andaya Jr. said the increased spending will have little impact in the gross domestic product (GDP), which is the total value of goods and services produced by a country.

He pointed out that the spending would come from the private sector especially from candidates and political parties because of the 45-day ban on public spending during the election period. The ban which starts on March 30 until May 14 bars the appointment or hiring of new government employees and the promotion or giving of salary increases. It also forbids the implementation of public works, delivery of materials for government projects, fund releases for these kinds of projects and social and development.

Andaya said the Department of Budget and Management has already allotted P9 billion to the Commission on Elections for both the May elections and for the Sangguniang Kabataan and barangay elections set later this year.

Finance Secretary Margarito Teves said the spending "will have a very, very small effect on the inflation rate."

The inflation rate is the rate of increase in the price of goods and services over a given period.

Teves said that studies in the 1998, 2001 and 2004 elections showed of the minimal impact of electoral spending on the economy despite the expected flow of money for political advertisements and propaganda materials.

Hundreds of millions of pesos into billions are expected to be spent during the election period including at least P500 million in television advertisements alone/

The Fair Election Act of 2001 allows independent candidate and political parties to spend P5 for each registered voter An independent senatorial candidate can spend up to P219.09 million for the country's 43.8 million registered voters.

Cyd Tuaño-Amador, Central Bank managing director, said the spending during the elections is merely "change of hands because the money is already there."

She said the economy can absorb any changes in the amount of money which could not affect this year's projected inflation rate of 4-5 percent.

But Trade Secretary Peter Favila said the conduct of the elections could affect the confidence of foreign investors.

He said investors would be attracted on put in money in areas where the elections are honest, peaceful and orderly.

The economic officials who were here as part of a series of economic briefings remained bullish that the economic growth recorded last year will be sustained this year amid the a mid-term election.

Amador cited the 8.3 percent appreciation of the peso last year and the 24 percent increase in portfolio investments and 50 percent in foreign direct investments.

Favila said foreign investor confidence in the country is the highest in six years. He cited the pronouncement of the American Chamber of Commerce that investors from the United States would be putting in up to $ 3 billion worth of investments in the country this year.*NPB

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