DBCC narrows GDP growth target
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Wed, 11 Dec 2019 16:26:45 +0000
THE country’s economic managers have tightened their growth target and adjusted other macroeconomic goals for this year after the 177th meeting of the interagency Development Budget Coordination Committee (DBCC) on Wednesday.
In a joint statement, members of the DBCC announced that their gross domestic product (GDP) growth goal range for 2019 is now between 6.0 and 6.5 percent, from the previous 6.0 to 7.0 percent.
Explaining the revision, National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon said that, for this year, “we’re actually proposing a tighter band, because we already have the first quarter to third quarter numbers.”
“So I think [that]…if we say 6.0 to 7.0 percent, it’s not already credible, given that we already have the first three quarters,” she added.
Economic growth accelerated to 6.2 percent in the third quarter after the slower-than-expected 5.6-percent and 5.5-percent expansions in the first and second.
Meanwhile, the committee kept the growth target for the next three years at 6.5 to 7.5 percent.
The DBCC said the average inflation rate for 2019 might settle at 2.4 percent, lower than the previous forecast of 2.7 to 3.5 percent, “indicating relatively stable prices for Filipino consumers,” while the assumed average rates for 2020 to 2022 would remain between 2.0 and 4.0 percent.
The peso-US dollar exchange rate assumption was changed to P51 to P52:$1 from the earlier P51 to P53:$1. For 2020 to 2022, it remained at P51 to P55:$1.
Assumption for the growth in the exports of goods, the interagency body said, was also revised downward to 1.0 percent for this year and 4.0 percent in 2020 from the previous 2 percent and 6 percent, respectively, because of continuing unresolved trade tensions.
“However, the assumptions for 2021 and 2022 are retained at 6.0 percent as global economic activity is expected to recover in the medium term,” it added.
Growth in the imports of goods, on the other hand, was changed to 2 percent from the previous 7 percent, and would accelerate to 8 percent from 2020 until 2022.
Fiscal program
Economic managers, meanwhile, retained their estimate for revenue collections at P3.15 trillion in 2019, equivalent to 16.8 percent of GDP.
For 2020, revenues are projected to increase to P3.49 trillion, equivalent to 16.6 percent of GDP, while disbursements are programmed at P4.16 trillion, or 19.8 percent of GDP.
According to them, disbursements are targeted to hit P3.76 trillion in 2019, or 20.0 percent of GDP.
Revenue and disbursement projections are estimated to rise to P4.31 trillion (17.0 percent of GDP) and P5.12 trillion (20.2 percent of GDP), respectively, by 2022.
The DBCC said the government’s comprehensive tax reform program could help ensure a reliable revenue base and enhance the economy’s modernization.
“Quickly completing the passage of the remaining tranches of the tax reform will ensure a steady revenue flow and equitable sharing for the government’s social and infrastructure programs while securing fiscal stability long into the future,” it added.
The panel also pointed out that the speedy passage of the second tax reform package, the Corporate Income Tax and Incentives Rationalization Act (Citira), would help bring additional investments into the country; and the alcohol and e-cigarette excise tax adjustments would substantially bridge the funding gap for the government’s Universal Health Care (UHC) program.
Given the revenue and disbursement program, it said the deficit target would be maintained at 3.2 percent of GDP from 2019 to 2022 “to sustain the government’s investments in infrastructure and human capital development.”
2021 budget
Economic managers also announced that, consistent with the macroeconomic assumptions and foregoing fiscal targets, the 2021 cash budget was pegged at P4.64 trillion.
The amount is higher by P540 billion or 13.3 percent than the P4.100-trillion cash budget for 2020, and is equivalent to 20.2 percent of GDP.
“The proposed 2021 national budget will continue to support anti-poverty and peace-sustaining measures through funding of recently-approved legislative measures,” the DBCC said.
In line with this, there will be continued funding for the UHC Program; Pantawid Pamilyang Pilipino Program; Rice Tariffication Law; provision for the Annual Block Grant, Special Development Fund and Share in National Taxes of the Bangsamoro Autonomous Region in Muslim Mindanao; Universal Access to Quality Tertiary Education; Refocusing of National Government assistance to local governments with high poverty incidence; and climate change mitigation and adaptation measures.