Philippine GDP slows down to 5.6% due to re-enacted budget
The Philippine economy slowed down to 5.6 percent in the first quarter of this year due to the delay on the passage of the 2019 budget, the government's top economist said on Thursday.
The latest gross domestic product (GDP) growth was the slowest rate recorded in 16 quarters since 5.1 percent in the first quarter of 2015, Socioeconomic Planning Secretary Ernesto Pernia said in a press conference in Pasig City.
"As we have forewarned repeatedly, the re-enacted budget would sharply slow the pace of our economic growth. We estimate that we should have grown by as much as 6.6 percent this first quarter if we were operating under the 2019 fiscal program," he said.
The 2019 General Appropriations Act, with the amount of P3.757 trillion, was only signed into law by President Rodrigo Duterte last April following the disagreements of the Senate and the House of Representatives on the alleged "insertions," primarily made by some congressmen.
Specifically citing the effect of a reenacted budget from January to March, Pernia, also director general of the National Economic and Development Authority, said government final consumption expenditure weakened, expanding only 7.4 percent as against the 13.6 percent in 2018, while public construction contracted by 8.6 percent.
He also lamented on the failure of the Commission on Elections to immediately act on the administration's request to exempt some major infrastructure projects on the election ban, which took effect on March 29.
Among the major economic sectors, Philippine Statistics Authority Assistant Secretary Josie Perez said the biggest contributor to GDP growth during the first quarter was services, expanding by 7 percent, followed by industry, with 4.4 percent. Farm output was only at 0.8 percent.
Pernia said the weak growth in the agriculture sector was attributed to the El Nino phenomenon, which could continue until August this year.
The first quarter GDP expansion was lower than the government's full-year target of 6 to 7 percent.
To attain the goal for 2019, Pernia said the economy needs to expand by an average of 6.1 percent over the next three quarters.
Likening the economic performance of the country to the Filipinos' "most favorite" sport of basketball, he said the entire government team really has to "catch up and work very hard over the next three quarters."
"This is still achievable given the current performance of the private sector and if the government sector is able to jumpstart and speed up the implementation of its new programs and projects," he said.
He urged the Department of Budget and Management to issue as soon as possible a budget circular for the GAA that would extend validity of the budget.
"While we support the implementation of the cash-based budget system, the supervening circumstances?such as the delayed budget and the election season?warrants an urgent review of the cash-based budgeting rules. If the payment period and budget validity are not extended, government agencies may decide to forgo implementing new programs and projects that are expected to take longer than seven months to complete, inclusive of the procurement process," he said.
Asked if he expects a "friendlier" 18th Congress to prevent another delay in the passage of the proposed budget, Pernia said, "our statement is strong enough but polite," noting the warning the economic team had issued several times in the past on the negative impact of a re-enacted budget on the economy.
Pernia also said it would be advisable to amend the Omnibus Election Code, particularly the provision on the ban in the implementation of certain government projects during an election period.
Meanwhile, on the seeming disturbances on the political side, especially after Malacanang came out with a matrix alleging some groups and personalities of conspiracy to oust the Duterte administration, Pernia, asked of possible effect on the investment climate, expressed belief local and foreign investors "have learned to be transcendent on their view of the economy."
"They are not really so bothered about these some stylistic things...they just look beyond these mundane things. They are more concerned about the performance of the economy per se," he added. Celerina Monte/DMS
