MANILA – The passage of the Philippines’ 2020 national budget and its signing early this month can support the country to post a strong growth this year, which Moody’s Investors Service forecasts to be around 6.2 percent.
In a report, the debt rater said the country’s PHP4.1-trillion national budget this year, which was signed by President Rodrigo R. Duterte last Monday, is 12 percent higher than last year’s PHP3.7-trillion national budget.
This year’s national budget, it said, “will help sustain the Philippines’ rapid economic growth against an uncertain global backdrop, a credit positive.”
Last year, the government operated on a re-enacted for several months until its signing into law on April 15.
This affected government spending since new infrastructure projects were not implemented based on program.
However, the government implemented a catch-up infrastructure spending program to address the impact of the delay in the approval of the national budget on domestic growth.
Moody’s expects this year’s national budget, along with the extension of the validity of the 2019 budget for infrastructure program, to support fiscal expansion and domestic growth.
“We project the Philippines’ real GDP (gross domestic product) growth will accelerate to 6.2 percent this year from 5.8 percent in 2019, faster than most regional and rating peers and bucking the trend of lackluster global economic growth,” it said.
The government’s 2019 GDP target is between 6 percent to 6.5 percent, and 6.5-7.5 percent for 2020-2022.
Moody’s also projects further improvement of the country’s fiscal metrics on account of the structural improvement of revenues as a result of the tax reforms.
“We expect national government debt to remain stable and debt affordability to improve,” it added.