By Bernadette D. Nicolas & Jove Moya
THE government will find it easier to hit its GDP growth target for 2020 due to the timely passage of the proposed General Appropriations Act (GAA) for next year, Finance Secretary Carlos G. Dominguez III said on Thursday.
Dominguez said the country’s economic managers are banking on the bicameral conference committee’s swift approval of the P4.1-trillion budget after the Senate green lighted the money measure on third and final reading on Wednesday.
“I am happy that the Senate has approved the budget. We now go into the bicam and I now trust this bicam would go quite quickly so we are very confident that by the end of the year we will have our full year budget approved for next year,” Dominguez told reporters in a press conference following the Economic Development Cluster (EDC) meeting.
Asked about the chances of the country hitting its growth target next year following the developments related to the money measure, he said, “Of course, that will help greatly.”
However, he said it is not only the budget that is important; there are international risks that should be considered, such as the ongoing trade war between the United States and China.
“So far although there are good reports about this trade war getting resolved, I think that’s the good news. I am not sure if those reports are accurate. We hope it will be,” he said.
6 percent goal
For this year, the government still hopes the country would at least achieve the lower end of its economic growth target of 6 percent this year despite the four-month delay in the passage of the 2019 budget.
Dominguez remained optimistic this would be achieved due to the improvement in government spending in October.
For January to October, total public spending rose by 5.1 percent to P2.94 trillion, from last year’s record.
However, Dominguez also revealed that there was a 5.5-percent year-on-year contraction for the January-to- October period in terms of government spending on infrastructure and capital outlays due to the delay in the passage of the 2019 budget and the election ban.
“In the first 10 months of the year, total actual disbursements for infrastructure and capital outlays reached P628.5 billion. This is 73 percent of the 2019 full-year disbursement program of P859.5 billion but 5.5 percent lower than the actual disbursement for the same period of 2018,” he said.
Nonetheless, he said the infrastructure agencies, as well as the big-spending departments committed to accelerate disbursements for the rest of the year.
Thus, Dominguez said economic managers remain confident of hitting the country’s spending goal of P3.77 trillion for 2019.
To attain the spending goal for the year, Dominguez said the government needs to disburse a total of P832 billion in November and December.
Bullish on Citira
The Department of Finance also expressed confidence that the proposed Corporate Income Tax and Incentives Rationalization Act (Citira) will be approved by the Senate before year-end.
“I hope we can finish it before the end of the year—there are only a few days and there are lots of issues, that’s what might [delay] the implementation, but we think there’s still a fighting chance that the Citira might be approved this year,” said Dominguez.
Aside from Citira, Dominguez said they are optimistic the measures increasing the excise taxes on alcohol and e-cigarettes would also be passed this year.
“Well, there are two measures that we hope will get passed this year. First, the “sin” taxes on alcohol and finally the resolution on the taxes for e-cigarettes; and I hope there will be enough time to do the Citira,” Dominguez said.
The Citira seeks to gradually cut corporate income taxes starting 2021, eventually bringing down the current 30 percent to 20 percent by 2029.
It would also rationalize fiscal incentives allocated to businesses by putting specific time frames on them, and linking job generation and use of local inputs to certain parameters.