6%-7% GDP target possible with catch-up spending program: DOF

FILE: Finance Secretary Carlos Dominguez III at the New Executive Building in Malacañang on January 8, 2018. TOTO LOZANO/Presidential Photo

MANILA — Economic managers remain positive for the achievement of the 6 percent to 7 percent growth target this year as government spending continues to rise and inflation sustains its downtrend.

In a statement read after the meeting of the Economic Development Cluster (EDC) at the Department of Finance (DOF) office in Manila on Thursday night, Finance Secretary Carlos Dominguez III said economic managers have noted that the drop in the rate of price increases is a plus on domestic growth.

“We remain optimistic that the economy will expand at a higher clip over the remaining two months of 2019 as the government continues to accelerate the implementation of the ‘Build, Build, Build’ program and human capital development projects to make up for underspending earlier this year as a result of a reenacted budget,” Dominguez said.

He said the improvement in government expenditures has resulted in the recovery of domestic growth, as measured by gross domestic product (GDP) in the third quarter of the year.

Domestic growth in the first quarter this year slipped to 5.6 percent from the previous quarter’s 6.3 percent. It declined further to 5.5 percent in the second quarter, resulting in an average of 5.5 percent in the first six months of the year.

The decline was attributed to the impact of the delay in the approval of this year’s national budget, which was only signed into law on April 15, as well as the construction ban during the election period.

However, the release of the budget in the latter part of the first half of the year allowed the government to hasten the implementation of various infrastructure programs to lift growth. This resulted in the improvement of GDP growth in the third quarter to 6.2 percent, which Dominguez also traced to cooling inflation.

After peaking at 6.7 percent in September and October 2018, the rate of price increases slowed to 0.8 percent last October.

This brought the 10-month average to 2.6 percent, at the lower half of the government’s 2 percent to 4 percent target band until 2021.

Dominguez said members of the EDC, during their meeting Thursday, discussed updates of the catch-up program.

He said that as of end-October, almost 100 percent of this year’s PHP3.66 trillion budget has been released to various agencies.

“With this, it is expected that disbursements will further accelerate in the remaining two months of this year to support a higher GDP growth rate,” he said.

Dominguez said total disbursements in the first 10 months of the year reached PHP2.938 trillion, 78 percent of the full-year program of PHP3.77 trillion and a 5.1 percent jump year on year.

He said spending for infrastructure and other capital outlays reached PHP628.5 billion as of October, amounting to about 73 percent of this year’s PHP859.5 billion program.

The finance chief, however, said that the latest figure is 5.5 percent lower than the year-ago level “mainly due to the delay of the passage of the 2019 national budget and election ban.”

“To attain our target disbursement of PHP3.77 trillion in 2019, the government needs to disburse PHP832 billion or 22 percent for the remaining two months of the year,” he said.

Dominguez said Public Works and Highways Secretary Mark Villar has assured them that his department would be able to meet its PHP725 billion total disbursement program this year. As of October, it has been able to disburse about PHP503.4 billion, or 69 percent of the total.

Transportation Secretary Arthur Tugade has also made the same pronouncement even if it has just disbursed 57 percent or PHP46.82 billion of its disbursement program as of November 28.

“DOTr (Department of Transporation) expects to disburse an additional PHP30.85 billion in the last month of the year to fulfill 94 percent (of) its commitment of PHP82.39 billion for 2019,” Dominguez said.

Other projects that are eyed to contribute to the catch-up spending program include the infrastructure projects of the Department of Education (DepEd) and Department of Social Welfare and Development (DSWD).

Apart from the infrastructure program, Dominguez said the government is also hastening the implementation of the conditional cash transfer (CCT) program to the estimated 3.88 million beneficiaries, which is about 93.21 percent of the 4.16 million target beneficiaries.

“Overall, we remain on track to reach our GDP growth target of 6 (percent) to 7 percent in 2019,” he added.