Arroyo to lay out plans for Philippine legacy

MANILA, July 23 (Reuters) Philippine President Gloria Macapagal Arroyo will lay out the agenda for the remainder of her term in a policy speech today that is expected to be long on goals but short on specifics.

In her annual state of the nation address, Arroyo will outline investments in infrastructure and education to boost growth and stress her ambition to sign a deal ending decades of Muslim insurgency in the south of the largely Catholic country.

The former economist, whose final term ends in 2010, is expected to target the business community as she sets about building her legacy, mindful that her main achievements have been in the economic field and the general public is unlikely to warm to her after years of distrust.

But local business leaders and analysts are not expecting much concrete action from today's speech at (1330 IST).

The state of the nation address is traditionally an opportunity to parade past achievements and set lofty visions.

''I don't think there are any secrets that will come out,'' said one Manila-based broker, who declined to be named.

''Usually there is an effort by the government funds to move the markets a little higher for the state of the nation address, after that it will quieten down again.

The stock market was 0.4 per cent weaker in mid-morning trade, while the peso was quoted at 44.97 against the dollar, weaker than Friday's 44.8 close.

In the capital, thousands of anti-riot police secured the area around the Congress as protestors, some bearing effigies of Arroyo, gathered to demonstrate against a president they deem illegitimate due to allegations of fraud in the 2004 election.

PEACE In an interview with Reuters earlier this month, Arroyo said her policy speech would spell out how to make the Philippines a first world nation within 20 years.

The mother of three has been applauded for squeezing the country's ballooning deficits through higher taxes and restrained expenditure.

But fiscal finances are starting to slip and while Arroyo is expected to reaffirm the government's commitment to cutting the annual shortfall she is not expected to outline new measures to deal with the slippage.

''If you did see an announcement that the government was going to be pursuing the introduction of new taxes then I think the market would take that well,'' said Nick Bibby, economist with Barclays Capital in Singapore.

Arroyo is expected to reiterate her commitment to agreeing a peace deal with the Moro Islamic Liberation Front (MILF), the country's largest Muslim rebel group, despite a gun battle last month in which 10 Marines were beheaded.

But people in the south are less confident and are girding themselves for retaliation this week for the mutilations.

Across the archipelago, hopes for peace remain dim as communist rebels continue to wage a prolonged insurgency and leftwing activists are still picked off by assassins on motorbikes.

A United Nations report has said the military was responsible for many of the hundreds of leftist murders and Arroyo's failure to prosecute anyone, along with lingering distrust of her 2004 election victory, risks overshadowing her economic achievements.

''President Arroyo may want to be remembered for the six years of uninterrupted growth recorded under her watch,'' said an editorial in Monday's Philippine Daily Inquirer.

''But in fact her legacy will be blighted, for all time, by allegations of election fraud and the spree of political killings.'' Reuters SKB DB0834