Malacañang Thurdsday vowed to guard against bloating the country’s debt stock to bankroll the massive reconstruction of calamity areas in Luzon.

Deputy Presidential Spokesman for Economic Affairs Gary Olivar  said they are concerned by the worstcase scenario of P300 billion deficit presented by Finance Secretary Margarito Teves following the fresh spending for typhoon relief efforts.

Olivar stressed that the government is inclined to raise funds preferably through foreign grants and concessional loans for the rebuilding program.

President Arroyo earlier said commercial borrowings, including reconstruction bonds, will be the last financing option so as not to widen the budget deficit. The issuance of the reconstruction bonds estimated at P50 billion will be coursed through the state-run National Development Corporation.

“The lower range of growth rates projected by Secretary Teves for this year because of the typhoons is consistent with other forecast sources but remains a creditable performance considering the lingering effects of the global recession. A higher deficit of P300 billion is obviously cause for concern and should be regarded as the fiscal cost extracted by the typhoons,” Olivar said.

“This is why the President remains cautious about going into more debts to finance reconstruction. We still prefer alternatives like grants, concessional loans, and available but unprogrammed government funds,” he said.

Teves earlier admitted it was difficult to contain targeted funding shortfall given the additional expenditure on typhoon rehabilitation and the delays in the privatization of state assets. But he stressed the government will stick to the P250 billion ceiling despite problems in cash flow.

Apart from holding a special international pledging session for relief aid, President Arroyo is counting on Congress to pass a P12 billion supplemental budget to fund rehabilitation following the onslaughts of storms Ondoy and Pepeng.

Meanwhile, Albay Gov. Joey Salceda yesterday said it may take five years to rebuild typhoon-hit provinces and fortify infrastructure to reduce disaster losses in the future.

Faced with the long and arduous road to recovery, Salceda, economic adviser of Mrs. Arroyo, said government and the private sector should "help, prepare and learn" after the devastation caused by storms Ondoy and Pepeng before playing the “blame game.”

Salceda said half of the rehabilitation works is the daunting mission to find resettlement of thousands of families dislocated by the floods, adding they should be placed out of harm’s way. The government must also consider fortifying the damaged roads, drainage systems, and other vital infrastructure that could withstand stronger typhoons and other disasters in the future, he added.

"The reconstruction task is not short-term and may take five years. Hindi mo naman basta ibabalik sa dati, hindi na p’wede yun. Kung ibabalik mo sa dati, parang wala ka na natutunan," he said in a radio interview.

"If the drainage system was good for 140 kph and 200 mm rainfall, hindi na pwede yun. You need to have higher specifications. Ang norm ngayon 240 kph at rainfall aabot ng 200 mm. Ibig sabihin, kailangan ng redundancy," he added.

Salceda said the gargantuan task of rehabilitating disaster-hit areas was another reason why representatives from business, religious, and non-government organizations were selected to join a special reconstruction commission formed by President Arroyo.

Apart from being more capable managers than the government, the private sector provides “greater continuity in policy and permanence in personnel,” according to Salceda. “Especially with the run-up to the elections, the more you need the private sector.”

Most of the cabinet secretaries interested in the 2010 elections are expected to resign to file their certificates of candidacies next month, he pointed out.

Salceda said the government also needs the church and the private sector to assist in the difficult relocation of families from flood-prone areas such as near Laguna Lake and Pasig River. "You need the network and connections of the church, the credibility to convince and influence the people," he added.

The special national public-private commission, headed by PLDT chairman Manny Pangilinan with Teves and Cebu Archbishop Ricardo Cardinal Vidal as co-chairmen, will seek foreign relief aid and supervise the rehabilitation program in calamity areas.

Laying out the imminent tasks of the Pangilinan-led commission, Salceda said the group should first conduct a thorough assessment of the destruction left by storms Ondoy and Pepeng in Luzon.

The commission should then prioritize the areas that need urgent rehabilitation, the amount needed for such endeavor, and prepare for the international pledging session. The pledging session, possible next month in Spain, will be in coordination with the United Nations and World Bank.

"As a parallel effort of the Department of Finance, it will sound off to foreign donors to match these priorities," Salceda added.

He explained the commission, patterned after the Coordinating Council for the Philippine Assistance Plan set up after the Marcos regime, will serve a clearing house of all foreign grants and will "not disburse the funds." The foreign governments and donors, he made clear, would still implement the projects in coordination with the commission.

A minimum of $1 billion should be raised for the rehabilitation works, in which $20 million will already go to the relocation, P21 billion for infrastructure rehabilitation and P5 billion for livelihood and agriculture, according to Salceda.

He added the special international pledging session was a "collection exercise" from the Philippines, a victim of climate change. He said rich nations have brought the “double whammy” on nations like the Philippines, citing the global financial crisis and the climate change as a result of their financial mismanagement and excessive lifestyle.

"We can't sell an idea by insulting the buyer but we can raise the carbon guilt card accompanied by sustainable development framework," he said. Among the foreign donors that could be tapped are the United Nations, and Spain, and Japan, two of the country’s close allies.