Economic managers cut growth, revenue targets
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 13 Mar 2019 16:19:41 +0000
Economic managers have cut their growth forecasts for 2019 and 2020, citing factors such as a reenacted budget, an ongoing El Nino and the US-China trade war, and also slashed revenue projections for this year due to a partially-vetoed tax amnesty law.
Following a meeting of the interagency Development Budget Coordination Committee (DBCC) on Wednesday, Budget department officer-in-charge Janet Abuel announced that they were now targeting 6.0-7.0 percent growth for this year and 6.7-7.5 percent next year, down from 7.0-8.0 percent previously.
The estimates for 2021-2022 were kept at 7.0-8.0 percent.
Socioeconomic Planning Secretary Ernesto Pernia, who earlier in the day warned that growth could slow to as low as 4.2-4.9 percent if Congress failed to act on this year’s budget, said the adjusted growth targets took into account the government’s operating on a reenacted budget only up to April.
“The impact on economic growth of budget reenactment is estimated at -0.7 to -0.9 percentage points (ppt) if the budget is reenacted until April 2019, -1.4 to -1.9 ppt if until August 2019, and -2.1 to -2.8 ppt under a full-year reenacted budget,” Abuel explained.
Taking these into consideration, she said economic managers were urging Congress to transmit the 2019 national budget at the soonest
possible time to Malacañang so the government can sustain spending on priorities such as public infrastructure and social services.
“The longer the budget impasse lasts, the larger the adverse effect to the Philippine economy and its people,” Abuel added.
Finance Secretary Carlos Dominguez 3rd reiterated that the government would be unable to spend a programmed P46 billion during the first three months of the year given the delay in the passage of the 2019 budget.
“That’s half a billion pesos a day that we are not spending to create jobs, to improve the infrastructure, for better health care and education,” he said.
Dominguez stressed that the trade row between the US and China was also expected to curtail growth.
“Internationally, the unresolved trade issues between our major trading partners is a source of our concern. And we also know very well that any slowdown in growth of our trading partners will definitely negatively affect our own growth possibilities,” he said.
Pernia, meanwhile, warned that El Nino phenomenon would have a “mild” impact on growth.
Nevertheless, economic managers said they remained confident that the Philippine economy would remain resilient.
“We assure the Filipino people that the economic managers will continue to monitor developments, at home and overseas, to secure the sustained growth and development of the country,” they said.
Revenue goal revised
During Wednesday’s meeting, the DBCC also slashed the government’s 2019 revenue goal to P3.15 trillion from P3.208 trillion, which Dominguez attributed to President Rodrigo Duterte’s decision to veto provisions of the recently-signed Tax Amnesty Act.
The lower revenue goal is equivalent to 16.9 percent of GDP, which economic managers said was still the highest in recent years.
Revenues from the tax reform program are projected to contribute P162.2 billion, taking into account last year’s Tax Reform for Acceleration and Inclusion law and the approved Package 1B less the electronic-receipts system, they said.
Disbursements are targeted to reach P3.78 trillion in 2019 — equivalent to 19.4 percent of GDP — assuming the national budget is reenacted in the first quarter.
Given the approved revenue and disbursement programs, economic managers announced that the corresponding nominal deficit target had been set at P631.5 billion for 2019, equivalent to 3.2 percent of GDP.
The deficit target will be maintained at 3.0 percent of GDP from 2020 to 2022, “striking a good balance between fiscal discipline and higher investments for urgent programs and projects,” they added.
Other targets
Economic managers still see inflation to average within the 3-4 percent range this year and 2-4 percent from 2020 to 2022.
The Dubai crude oil per barrel price assumption, meanwhile, was adjusted downwards for the medium term. For 2019 to 2022, prices are now projected to average between $60-75 per barrel from $70-75 previously.
The peso-dollar exchange rate assumption was retained at P52-55 against the US dollar for 2019 to 2022.
The exports growth goal was also maintained at 6.0 percent from 2019 to 2022 as were those for imports — 9.0 percent in 2019 and 8.0 percent from 2020 to 2022.
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