Finance Secretary Carlos G. Dominguez III is hopeful that the economic growth of the country could hit the 6-percent territory in the coming quarters as the Duterte administration’s catch-up spending strategy picks up during the third and fourth quarter of this year.
The finance chief said in a statement that growth will also be partly driven in the year’s remaining half by stronger domestic consumption amid the continued slowdown in headline inflation, which fell to a 31-month low of 2.4 percent in July.
“For instance, in infrastructure—with its multiplier effects on growth—the bulk of the disbursements in the year’s second semester is expected to keep economic expansion on a higher plane, barring obstacles such as erratic weather disturbances,” Dominguez said.
Dominguez pointed out that the country’s gross domestic product (GDP) growth of 5.5 percent in the second quarter this year was not an unexpected result given the residual effects of the four-months-and-a-half delay in the passage of the 2019 national budget.
“Second-quarter growth was not an unexpected result given the apparent lingering impact on the government’s accelerated spending program of the four months-and-a-half delay in the passage of the 2019 budget in the House of Representatives. This delay was further exacerbated by the ban on infrastructure projects during the election campaign,” he added.
He likewise noted that the Implementing Rules and Regulations (IRR) on the 2019 General Appropriations Act was released only on the last week of May.
Given the constraints, though, he said the President’s economic team had managed to carry out the catch-up spending plan only starting the last week of May when the IRR of the 2019 budget was released.
The finance chief explained that the President’s economic team would look out for other possible downside risks that could weigh on growth in the second semester, such as the escalating trade war between the United States and China and weak farm production.
He also expressed optimism that there will no longer be a repeat of the 2019 budget delay given the commitment of both Senate and House of Representative leaders to pass their consolidated general appro-priations bill (GAB) version on time, and this week’s agreement by Malacañang and the Congress to work closer on the passage of the budget bill and other priority measures via the Legislative-Executive Devel-opment Advisory Council (LEDAC) route.
The delay in the passage of the 2019 budget bill resulted in government underspending equivalent to P80 billion to P90 billion for the first quarter alone, according to Dominguez.
Department of Budget and Management (DBM) data bared that owing to the four-month budget delay, however, public spending on capital outlays over the January-June 2019 period only reached P377.5 bil-lion as against programmed funds of P478.7 billion, or an underspending of P101.2 billion.
Of this amount, infrastructure spending during the first semester only reached P311.4 billion as against the programmed allocation of P392.9 billion, or an underspending of P81.5 billion.
On Thursday, local economists said the government will have difficulties attaining its goal of halving poverty incidence by 2022 if economic performance will remain anemic for the next three years.
Local economists made the statement after the Philippine Statistics Authority (PSA) reported that GDP growth for the second quarter reached 5.5 percent, lower than last year’s 6.2 percent and the 5.6 percent recorded in the first quarter of 2019.
Image credits: Department of Finance