PH economy to grow at slower pace if budget impasse not resolved soon, economic team warns
The Philippine economic growth could slowdown to 4.2 to 4.9 percent if the impasse on the proposed P3.757-trillion budget for this year would not be resolved, President Rodrigo Duterte's economic team warned on Wednesday.
The economic managers urged Congress to transmit the 2019 National Budget at the soonest possible time to Malacañang so the government could sustain its investments on development priorities, such as public infrastructure and social services.
"The longer the budget impasse lasts, the larger the adverse effect to the Philippine economy and its people," said a joint statement issued by the economic team after its 175th Development Budget Coordination Committee meeting.
"The impact on economic growth of budget reenactment is estimated at -0.7 to -0.9 percentage points (ppts) if the budget is reenacted until April 2019, -1.4 to -1.9 ppt if until August 2019, and -2.1 to -2.8 ppt under a full-year reenacted budget," the economic managers said.
In a statement issued earlier in the day, Socioeconomic Planning Secretary Ernesto Pernia explained a reenacted budget until April would bring down full-year gross domestic product (GDP) growth to 6.1 to 6.3 percent.
“On the other hand, if the budget is passed in August, expect growth to be around only 4.9 to 5.1 percent. Worse, with a full-year reenacted budget, growth can go as low as 4.2 to 4.9 percent,” he said.
Pernia also emphasized that a reenacted budget would create a delay in both new and ongoing infrastructure projects, as well as the implementation of public social services such as the Unconditional Cash Transfer and Pantawid Pasada Programs.
“The government would not be able to quickly execute programs and projects. This means that we will miss the opportunity to create as much as 180,000 to 240,000 more jobs, and fail to lift as much as 400,000 to 550,000 more Filipinos out of poverty this year,” he said.
The Philippine economy recorded a full-year GDP growth rate of 6.2 percent in 2018, lower than government’s revised target of 6.5 to 6.9 percent. This is also lower than the 6.7 percent and 6.9 percent recorded in 2017 and 2016, respectively, largely due to the spikes in inflation rates in 2018.
“Even with this, the economy has been steadily growing by at least 6.0 percent for seven consecutive years. Also, in the first ten quarters of the administration, the economy has been growing at an average of 6.5 percent. We need to sustain this momentum, or even accelerate it, now with inflation rate down and within our target range,” Pernia said.
Meanwhile, the DBCC members, composed of Pernia, Finance Secretary Carlos Dominguez III and Budget and Management (DBM) officer-in-charge Janet Abuel, among others, revised the GDP growth targets for this year until 2022.
"Gross Domestic Product (GDP) growth target range has been adjusted to 6.0 - 7.0% in 2019, 6.5 -7.5% in 2020, and 7.0-8.0% from 2021 to 2022," the economic team said in a statement.
Other macroeconomic targets for this year until 2022, however, were maintained.
The inflation assumption would remain at 3.0 - 4.0% in 2019 and at 2.0 - 4.0% from 2020 to 2022. DMS