President Gloria Macapagal Arroyo said Monday that she is studying the feasibility of declaring a state of economic crisis to ease pressure on public finances. 'We are already in the midst of a fiscal crisis, and we have to face it squarely,' she said. 'We are hoping to work this out with public support and openness to sacrifice. The pain is imminent, but it will be shared fairly.' The Philippines has accumulated a national debt of nearly 80 percent of gross domestic product close to $60 billion or 3.36 trillion pesos but Mondays statement from Arroyo marked the first time the president has referred to the country's impending economic situation as a crisis. Arroyos comments stemmed from a report made public by economists at the University of the Philippines, who said the country would face an Argentinian-style economic crisis in two to three years unless a widening public sector deficit and ballooning debt problem were brought under control. 'The growing dependence on debt means that any sudden increase in global interest rates, which can no longer be ruled out, would cause huge difficulties in repayment, whether or not the government defaulted formally,' the report said. 'This would result in a sharp cutback in subsequent credit, particularly from foreign lenders, and precipitate a crisis such as that Argentina or Turkey experienced.' The report warned that a spike in global interest rates could make it extremely difficult for the government to meet repayments on its foreign borrowings, precipitating a possible debt default within two to three years. According to the economists, public debt in the Philippines has more than doubled since the mid-1997 Asian crisis and interest payments account for a third of the government's spending. Monday's report was authored by the budget and economic planning ministers of Arroyo's predecessor, Joseph Estrada, and the economic planning ministers of former Presidents Corazon Aquino and Ferdinand Marcos. The economists also criticized some of the countrys politicians for pandering to the public's ignorance. They pointed to the deficits progression alongside economic growth, suggesting there are structural flaws within the countrys government, such as corruption, and weak tax collection practices. Nonetheless, Arroyo wants the economic planning chief Romulo Neri, Finance Secretary Juanita Amatong, Budget Secretary Emilia Boncodin and Trade Secretary Cesar Purisima to remain in the cabinet, her spokesman Ignacio Bunye said. Arroyo is expected to make further changes to her economic team. Arroyo, who secured a new term in the countrys general elections last May, has attempted to work with Congress on 'strategies to get the budget in place' by proposing five crucial tax measures in her State of the Nation Address last month. Yet she has been met with staunch opposition from these same legislators who have spurned suggestions of raising taxes. No members of Congress have sponsored Arroyos legislation which would generate 80 billion pesos more in annual revenue. In the interim, Arroyo renewed her call for the country to make sacrifices, saying the pain while imminent would be fairly shared. In the interim, the president urged her public to be resourceful, courageous and demonstrate solidarity as a nation. Average Filipinos are already taking the brunt of sacrifices but we have to gather round again as one national community to take stock of the future,' she said. Arroyo hopes to contain this year's national budget deficit at 197.8 billion pesos (3.54 billion dollars), with promises of wiping out the debt completely before her term ends on 2010. The deficit in the first half of this year reached 80.1 billion pesos, exceeding a government-set ceiling of 79.6 billion pesos. Ironically, Arroyo's budget plans call for the country to keep spending more than it collects for at least four more years. The dollar rose to 55.855 pesos on Monday from its close on Friday of 55.650 pesos, while the 30-company Philippine Stock Exchange composite index fell 6.66 points, or 0.4 percent, to close at 1,576.18. Joi C. Ridley ^2 Wanna kill these ads? We can help!