MANILA - THE two largest political parties in the Philippines, which hold 60-70 per cent of all elected positions, merged on Thursday ahead of presidential elections in May 2010.

President Gloria Macapagal Arroyo blessed the union of Lakas (Strength) Christian-Muslims Democrats and Kabalikat ng Malayang Pilipino (Movement of Free Filipinos) or Kampi, describing the merger as the administration's key to win elections next year.

'The emergence of Lakas-Kampi CMD as one party is our finest weapon and perhaps our best guarantee for success in the 2010 elections,' Mrs Arroyo told cheering party members at a Manila hotel.

She said the merger of the two parties was 'tangible proof' that her government was determined to push through with elections contrary to doubts expressed by critics and detractors.

'I look upon Lakas and Kampi as one, fighting as one and the instrument and vehicle for electing the best, most qualified and worthiest leaders of our country,' she said.

Mrs Arroyo's allies in the House of Representatives are preparing to debate a bill on amending the constitution, which opposition politicians say is aimed at removing term limits on elected officials, including the president.

Mrs Arroyo is not eligible to contest next year's election, under current law.

The economy, which shrank in the first quarter by its biggest margin in 20 years, is shaping up as one of the key issues. The government is pushing the central bank to continue its accommodative monetary policy, while the Bank is urging the government to step up spending in tandem with that.

Mr Gabriel Claudio, the president's political adviser, said the merged party's next agenda was to choose a common candidate for president and vice-president and it has until August or September to announce the administration ticket.

Along with the president and vice-president, half of the 24 seats in the Senate, all 250 members of the House of Representatives and more than 17,000 regional and local posts are to be filled in the May 2010 elections. -- REUTERS