CORRUPTION allegations have made the political authority of President Arroyo fragile, making it more difficult for the government to pursue its reform agenda in the final two years of her tenure, The Economist Group based in London said on Wednesday.

This translates to slower-than-anticipated growth averaging 5.7 percent a year for the next two years in terms of local output, measured as the gross domestic product, or GDP.

“The pace of economic growth is expected to average 5.7 percent a year in 2008 to 2009, representing a slowdown from the rate of 7.3 percent achieved in 2007,” the group’s economists said in their latest paper on the Philippines.

President Arroyo was expected to stay in power provided she retains the support of the military, although her legislative agenda was seen to suffer from the political opposition’s hardline stance.

The local currency, now approaching P44 a dollar, was seen to average P42.4 a dollar over the forecast period on the back of robust remittances from overseas Filipino workers and sustained healthy levels of investment and trade inflows.

“Buoyant remittances from overseas Filipinos, together with a healthy balance on the services account, will ensure that the current account remains in surplus in both years of the forecast period,” The Economist said.

But even as investment flows were seen to pick up, the rather poor state of the country’s infrastructure was seen to limit the actual volume of investments pouring in, according to The Economist.

The group sees inflation averaging higher this year to 6.8 percent, sharply up from original forecast of only 5.8 percent.

Actual inflation last year averaged only 2.8 percent.

The Economist anticipates the government to add to its rice stocks in the coming months to muffle press pressures but should find it “increasingly difficult to procure enough of the staple as the largest exporters in the region apply trade restrictions to safeguard their own supplies.”

The group also fears an inflationary wage-price spiral caused by workers demanding higher wages in response to rising inflation, “which could cause firms to increase prices to compensate for the rise in costs.”

Remove VAT on power, solon tells government

AN opposition legislator called for the removal of royalties on natural gas and the value-added tax (VAT) on electricity, which he said are long-term solutions on the electricity problem.

SAYING that prosecution for the violation of a law is not persecution, the US Board of Immigration Appeals (BIA) has denied the petition filed by former agriculture undersecretary Jocelyn “Joc-Joc” Bolante, alleged architect of the P728-million fertilizer scam, seeking reconsideration of the decision made by the Chicago Immigration Court rejecting his claim for political asylum.

CORRUPTION allegations have made the political authority of President Arroyo fragile, making it more difficult for the government to pursue its reform agenda in the final two years of her tenure, The Economist Group based in London said on Wednesday.

COMMUNIST guerrillas on Wednesday morning ambushed and killed three Army soldiers in a remote town in Sorsogon.

THE National Police leadership said on Tuesday that it will not acquire any substandard equipment for its members that will endanger their lives on the field.

Environment Secretary Lito Atienza is set to hold today a “blood compact” with a number of provincial governors and Metro Manila mayors in and around Pasig River, Manila Bay and Laguna Lake as he urged the people to protect the environment and value the country’s natural resources, particularly water.

ENVIRONMENT Secretary Lito Atienza appealed to Laguna de Bay fishermen to help the department in cleaning the lake.

ZAMBOANGA CITY—The United States Agency for International Development (USAid) and Petron Philippines on Wednesday formally kicked off its partnership to cofinance the construction of classrooms to help alleviate the classroom shortage and improve access to basic education in war-affected areas in Mindanao.