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UPDATE 2-Philippine policymakers reassure investors on peso, Marawi costs

(Adds comments from budget secretary)

* Peso is Asia's worst performing currency this year

* Infrastructure programme is pushing up imports

* C.bank governor dismisses concerns about balance of payments

TOKYO, Sept 26 (Reuters) - Philippine policymakers brushed aside concerns about a falling peso and fighting against Islamic State-linked rebels on Tuesday as they courted foreign investment for the government's ambitious infrastructure programme.

A decline in the Philippine peso is in line with economic fundamentals and will support growth by encouraging more investment in infrastructure, central bank Governor Nestor Espenilla said.

Speaking at a seminar in Tokyo, Espenilla said he saw limited pass-through to inflation from weakness in the peso and said the current account balance was manageable.

The peso is Asia's worst performing currency this year, at one point falling to 11-year lows against the U.S. dollar, partly due to a rise in capital goods imports to meet the needs of the governments ambitious infrastructure investment plans.

This is expected to push the current account into deficit for the first time in 15 years, which has raised some concerns among foreign investors about the country's resilience to external shocks.

"The peso's depreciation is in line with economic fundamentals," Espenilla said.

"What has changed is this current account deficit is a good deficit because it is being driven by investment. The Philippines is different than it was in the 1990s and during the Asian Financial Crisis."

The government aims to lift economic growth to as much as 8 percent with a six-year, $180 billion "Build, Build, Build" infrastructure programme for new roads, airports, ports and railways.

The scheme will be financed partly by a tax reform package, of which a watered down version was approved by the lower house of Congress in May. The bill still needs Senate approval.

Philippine Budget Secretary Benjamin Diokno said he is confident the version of tax reform package passed by the lower house, which is worth 134 billion pesos ($2.63 billion), will be approved.

While improved infrastructure is necessary to maintain the Philippine's high economic growth, some analysts are worried about the impact on the currency and the balance of payments.

Imports of capital goods, mainly infrastructure-related, have risen more than 7 percent in the first five months of the year from the same period of 2016 to $12.1 billion.

For the first time in 15 years, the Philippines is expecting its 2017 current account balance to be in a deficit of $600 million.

Some investors and economists still harbour memories of the 1997 Asian currency crisis, when high levels of dollar-denominated debt and current account deficits roiled Southeast Asian currencies.

Espenilla dismissed these concerns, saying the Philippines has higher currency reserves, stronger economic growth, and lower levels of inflation than in the past.

The central bank governor also said the government's commitment to keeping the budget deficit at 3 percent of gross domestic product should ease concerns about fiscal discipline.

Speaking on the sidelines of the seminar, the budget secretary said the financial impact of a protracted battle against militants in Marawi is not a big concern, saying the estimated cost so far is only 3 billion pesos, a fraction of the annual budget.

"The contribution of Marawi to the economy is less than half of one percent," he said.

Diokno said he needed to see final plans for the reconstruction of the southern Philippine city before deciding on how to finance the spending. ($1 = 50.8930 Philippine pesos) (Reporting by Stanley White; Editing by Kim Coghill)