The twin storms that pounded the main Luzon island with record rains over the past month caused billions of dollars in damage, and the government has said it will have to go further into debt to fund the reconstruction effort.

"This crisis is by no means over. In some ways the hard work is just starting," the United Nations' humanitarian chief, John Holmes, warned last week as he toured some of the devastated areas of the nation's capital.

Indeed, just ending the flooding that still consumes whole districts on the outskirts of the capital, Manila, will take months, officials say, and tens of thousands of business people and farmers have lost their livelihoods.

Tens of millions of dollars are going to have to be spent on repairing roads, bridges and other vital infrastructure across Luzon, while badly damaged hospitals and schools will also have to be repaired or rebuilt.

Finance Secretary Margarito Teves said the government's budget deficit may balloon to 300 billion pesos (6.4 billion dollars) this year to meet the damage bill, up from a deficit target of 250 billion pesos before the storms.

The Philippines sold one billion US dollar bonds on Friday to raise much-needed funds, and President Gloria Arroyo said last week the government would have to raise more money in the coming months.

Teves also warned economic growth this year could fall to 0.4-1.4 percent because of the storms, from an earlier forecast of 0.8-1.8 percent, although the downgraded target has yet to be made official.

Tropical storm Ketsana dumped the heaviest single day of rains in more than four decades on Manila and surrounding areas on September 26, killing 420 people and causing nearly 100 more deaths from ensuing disease outbreaks.

Typhoon Parma hit northern Luzon exactly a week later and hovered over the region for a week as a tropical storm, triggering landslides and floods that left at least 438 people dead.

The government said the storms caused at least 22.83 billion pesos in damage to agriculture and infrastructure.

But it acknowledged that was a conservative assessment which did not include the thousands of homes and businesses that were devastated.

In one flooded Manila district, fruit vendor Rey Rendaya, 52, represented countless other small businessmen when he said the flooding would push him further into debt.

"This business has no insurance and the capital I used to open this up was from a loan shark," Rendaya said as he hammered into place a rusted corrugated tin roof that he salvaged from the flood debris.

Meanwhile, tens of thousands of farmers north of Manila -- one of the country's rice bowls -- are equally distressed after losing their rice crops just days ahead of harvest.

The Philippines, already the world's biggest importer of rice, will have to buy more to cover the storm-induced shortfall, according to Agriculture Secretary Arthur Yap.

Nevertheless, there are some reasons for optimism. One of the strongest is that the nation's vital export sector was largely spared.

"There weren't that many industries that were hit," said the head of the country's export industry association, Sergio Ortiz-Luis.

Of particular relief was that the factories pumping out electronic products, which account for half the nation's exports, were not badly affected, according to Ortiz-Luis.

Meanwhile, government planners are looking to the fertile regions of the Visayas in the central Philippines and Mindanao in the south, both of which escaped the storms unscathed, to make up for the reduced output in Luzon.

The Philippines is also counting on its old economic saviour -- the nine million Filipino workers overseas who remit money back home to help relatives and friends.

"Because of the storm damage, a lot of remittance companies have experienced a strong inflow of dollars back to the Philippines," said Nestor Aguila of DA Market Securities.

Before the storms hit, remittances for the first eight months of 2009 had already risen 3.7 percent year-on-year to 11.34 billion dollars, according to official figures.

related report
Philippines warns of tough times after budget deficit soars
The Philippines announced Monday a wider-than-expected budget deficit and warned of more tough economic times ahead with scarce funds having to be spent on disaster reconstruction efforts.

The deficit soared to 237.5 billion pesos (5.08 billion dollars) in the nine months to September, up 345 percent from a year earlier and 19.9 billion pesos over the government's target ceiling, Finance Secretary Margarito Teves said.

"We are really facing tough times," Teves said as he announced the government was considering selling assets to help balance the books.

"Our revenue collection efforts are seriously hampered by the slowdown in economic activities and tax breaks that were granted largely through legislation."

However Teves said the government had to find extra money to pay for reconstruction programmes after tropical storms Ketsana and Parma caused billions of dollars in damage on the main island of Luzon over the past month.

"We need to spend for the urgent needs of our people, especially for the relief and rehabilitation of calamity-stricken provinces," he said.

"Millions of crops were damaged and a number of bridges were destroyed. We need the resources to rebuild and fortify our economy."

Ketsana pounded Manila with the heaviest rains in more than four decades on September 26. Parma then struck on October 3, destroying crops and triggering landslides across the mountainous north of Luzon.

Aside from destroying rice farms, fisheries, roads, hospitals and bridges, the storms claimed nearly 1,000 lives.

The government had already sold one billion dollars worth of US bonds last week to raise some much-needed cash, and Teves said the government was looking at selling state assets to further fund reconstruction efforts.

"We remain hopeful that we will be able to dispose of government assets before the end of the year that could help us generate additional revenues for our rehabilitation and reconstruction efforts," he said.

Teves did not elaborate on what assets may be sold.

Teves said nine-month revenues reached 839.8 billion, or 74.4 billion pesos short of the government's target.

Spending rose 15.4 percent to 1.077 trillion pesos, partly to finance a stimulus package to help the economy during the global meltdown.

The September deficit reached 27.5 billion, higher than the 21.6 billion pesos incurred during the same month last year.

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