ATTAINING the country’s growth targets will cost Filipinos either through higher taxes or more debts, as reaching a growth of 6 percent or better may lead to higher deficits, according to a New York-based think tank.
Global Source Partners country analyst and former central bank deputy governor Diwa Guinigundo said it may not be feasible to attain the country’s growth targets
Guinigundo said reaching the country’s “ambitious growth assumption” could lead the deficit to reach 5 percent of GDP.
“To finance the deficit, the government may have to impose additional or higher taxes, and if this is not feasible at this time,
borrowings may have to be stepped up again. Therefore, growth may be compromised and the likelihood is higher,” Guinigundo said.
“Debt servicing of a larger external debt could also be problematic given the volatile peso-dollar exchange rate. This should apply for the growth outlook next year when the 2024 budget was increased by Congress by some 9.5 percent over this year’s budget,” he added.
Guinigundo explained that the government’s revenues in the first three quarters of the year declined to 16.5 percent of GDP from last year’s 17.1 percent of GDP.
Given this, he said the government’s actual expenditures of P3.8 trillion are short of the programmed spending of P3.9 trillion.
“While it’s true that the deficit of P984 billion was lower than the programmed amount of P1.1 trillion, the last quarter of the year may not succeed in sustaining this trend. If public spending turned out lower and growth slowed down, the revenue projections might not materialize,” the former Bangko Sentral ng Pilipinas deputy governor said.
Guinigundo said the recent call of the government to intensify catch up spending may also mean “very little” if the national budget this year will be left to fuel the country’s growth.
Earlier, National Economic and Development Authority (Neda) Secretary Arsenio M. Balisacan said attaining the low end of the 6 to 7 percent growth target this year means the fourth quarter must post a growth of 7.2 percent.
GDP growth in the first to third quarters or between January to September this year was pegged at 5.5 percent.
Balisacan also said the growth in the third quarter and the January to September period was also made possible by government’s spending catch-up.
“With high actual utilization of the cash allocation, and big advances in key project-implementing departments, we should expect a better fiscal turnout. However, it looks like there could be little left for the last quarter of 2023,” Guinigundo said.
“This should be a subject of intensified championing in Congress and civil society, and a more enlightened executive implementation based on transparency and accountability. Short of that, prayer would be exigent,” he stressed.
BusinessMirror had earlier reported that Filipinos trying their best to keep up with rising prices led to the slowest consumption growth in two years, according to local economists.
While government consumption improved to 6.7 percent, household consumption slowed to 5 percent, the lowest since the 4.8-percent contraction recorded in the first quarter of 2021.
Apart from high inflation, the decline in Labor Force participation could also be blamed for the slowdown in consumption.
Based on data obtained by BusinessMirror from the PSA, there were 49.04 million Filipinos in the labor force in the third quarter of the year, a 2.33-percent reduction from the 50.21 million in the labor force in the third quarter of 2022.