Above 6% GDP eyed with ‘catch-up plan’
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Fri, 24 May 2019 16:54:23 +0000
THE country’s economic managers will embark on an “expenditure catch-up plan” to offset the negative impact of the delayed 2019 budget on growth.
“This morning, the members of the Economic Development Cluster held a meeting to formulate a carefully crafted and bold expenditure catch-up plan to enable us to hit a GDP (gross domestic product) growth rate of above 6 percent this year,” Finance Secretary Carlos Dominguez 3rd announced in a briefing on Friday.
During the meeting, he said, key infrastructure agencies presented their updated spending plans for this year “to substantially offset the lower spending in the first quarter resulting from both the budget delay and the election ban on public works.”
A dispute between the Senate and the House of Representatives over alleged insertions resulted in the four-and-a-half-month delay of the passage of the 2019 national budget. This forced the government to run on last year’s budget, limiting it to spend for items detailed in the 2018 outlay and not on programs and projects supposed to be implemented this year.
This put total national government spending in January to March — which include expenditures for infrastructure and capital outlay, maintenance, personnel services and subsidies — at P778 billion, up 0.8 percent or P6 billion from the amount in the same period last year.
This caused Philippine economic growth to decelerate to 5.6 percent in the first three months, well below the government’s downwardly revised 6- to 7-percent target.
“To enable us to hit a GDP growth rate above 6 percent this year, national government needs to ramp up its spending,” Dominguez said.
For his part, Socioeconomic Planning Secretary Ernesto Pernia said that, to reach the full-year growth target, the economy would need to expand by an average of 6.1 percent over the next three quarters.
“This target is still within reach, should the private sector sustain its current performance and government be able to speed up the implementation of its ongoing programs and projects, and jump start new ones,” he added.
Pernia also said that in order to hit the full-year disbursement program of P3.774 trillion, the government must spend P2.996 trillion in this year’s remaining quarters.
To reach the infrastructure-spending target of P1 trillion, the government must disburse P792.97 billion from the second to fourth quarters after actual infrastructure spending amounted to P207.2 billion in the first quarter.
To achieve these targets, the economic managers said the Public Works and Transportation departments had committed to spend a combined P803.1 billion in the next three quarters.
Infrastructure disbursements from other agencies — which include the Armed Forces of the Philippines Modernization Program of the Department of National Defense, the school-building program of the Department of Education, and the Health Facilities Enhancement Program of the Department of Health — “can further drive spending growth if they are able to accelerate implementation of their capital outlay programs and projects,” Dominguez said.
He and Pernia also agreed that the government will fast-track the implementation of its priority socioeconomic programs, such as the National ID System, Pantawid Pamilyang Pilipino Program, social pension, unconditional cash transfers, and fuel-marking program.
“But aside from the infrastructure and social-protection programs, the government also has to double its efforts in the agriculture sector, which should expand by at least 2 percent per year,” the Finance chief said.
Last, he said the economy was expected to expand at a higher clip in April to June, and the rest of the year, as inflation continues trending toward the official target range of 2 to 4 percent and the government accelerates the implementation of its infrastructure and human-capital development projects to make up for state underspending.
“We will intensify our efforts to restore last year’s upward momentum in our growth rate,” Dominguez added.
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