Fiscal policy needed to sustain growth recovery: DOF official

“Fiscal policy will continue to be a pillar for high, sustainable, and inclusive growth,” Finance Undersecretary Gil Beltran said in an economic bulletin on Friday. (File Photo: Department of Finance/Facebook)

MANILA — A ranking Department of Finance (DOF) executive said officials of various government agencies need to work closely with legislators for the passage of the proposed 2020 budget to further boost domestic growth.

“Fiscal policy will continue to be a pillar for high, sustainable, and inclusive growth,” Finance Undersecretary Gil Beltran said in an economic bulletin on Friday.

Fiscal policy refers to the use of taxation and government spending to influence the domestic economy.

In the first half of 2019, domestic growth, as measured by gross domestic product (GDP), averaged 5.5 percent, lower than the government’s full-year target of between 6 percent and 7 percent, due to the impact of the delay in the approval of this year’s national budget, which was only signed into law in mid-April.

The government’s inability to spend based on programs resulted in the slip of domestic expansion from 6.3 percent in the last quarter of 2018 to 5.6 percent in the first quarter this year and to 5.5 percent in the second quarter.

The government thus implemented a catch-up spending program that relied on, among others, the faster implementation of the various infrastructure projects of both the Department of Transportation and the Department of Public Works and Highways.

Last September, government expenditures posted a double-digit year-on-year growth of 39.01 percent.

This helped lift growth to 6.2 percent in the third quarter, which is higher than the previous year’s 6 percent.

Citing Philippine Statistics Authority data, Beltran said public construction in the third quarter this year expanded by 11 percent, a recovery from declines in the previous quarters.

Private sector construction rose by 19.1 percent from July to September, almost twice the 10.4 percent in the same period last year.

However, investment remained weak in the last quarter due to global growth worries, he added.

Meanwhile, Beltran said tax effort, or the ratio of tax collections to GDP, as of end-September already reached 15.7 percent, almost near the 15.8-percent level hit in 1997.

“With ample resources to mobilize, agencies should nevertheless continue working with Congress for the timely passage of the 2020 budget,” he added.