THE country’s gross domestic product (GDP) for the first quarter could have hit 7.2 percent if not for the delayed approval of the 2019 General Appropriations Act (GAA), as underspending for the quarter amounted to P69.5 billion, the Department of Finance said.
Based on its latest economic bulletin on the country’s GDP, the DOF said the country’s first-quarter GDP—a low 5.6 percent as reported earlier by the Philippine Statistics Authority (PSA)—was a casualty of the budget impasse between the Senate and the House of Representatives, whose leadership the senators accused of trifling with the bicameral conference report even after such had been ratified in plenary by both chambers.
“If the budget were approved as scheduled and disbursements were made promptly, GDP growth in the first quarter would have risen to 7.2 percent. Underspending of P69.5 billion in the first quarter of the year reduced GDP growth by 1.6 percent of GDP,” Finance Undersecretary Gil S. Beltran said.
The country’s first-quarter GDP of 5.6 percent is much lower compared to the reported first-quarter 2018 GDP of 6.5 percent.
Last week, the economic managers pointed out that the budget impasse in Congress in the first three months of the year set off a spending cutback which stifled economic activity.
The non-approval of the 2019 budget bill forced the government to operate on a reenacted 2018 budget for the entire first quarter, resulting in underspending equivalent to P80 billion to 90 billion in disbursements for the first quarter of 2019.
The economic managers added that the Philippine economy should have grown by at least 1 percentage point higher, at 6.6 to 7.2 percent, in the first quarter instead of the 5.6-percent rate.
Finance Secretary Carlos G. Dominguez III also earlier revealed that state spending fell by some P75 billion in the first three months of the year, based on an estimate of P1-billion loss per day, which meant “lost opportunity to fund new infrastructure projects, a setback aggravated by the public works ban this election campaign period.”
From the expenditure side, the lower growth can be traced to a moderated growth in both government consumption and capital formation/investment, which grew by 7.4 percent and 6.8 percent, respectively, compared to the 13.6 percent and 10.3 percent in the same quarter of last year.
The slowdown in capital formation is explained by the significant contraction in public construction by 8.6 percent compared to the 22.6-percent growth in the same quarter of 2018.
Last week, Dominguez expressed optimism the country will still post a higher GDP print for 2019, as enactment of the 2019 GAA will enable the government to fast-track the implementation of its “Build, Build, Build” infrastructure projects.