MANILA – Economic managers on Wednesday cut the range of growth target to six to 6.5 percent this year, and 6.5 to 7.5 percent for 2021-2022 partly in due to fiscal prudence.
In a briefing after the 177th Development Budget Coordination Committee (DBCC) meeting at the Department of Finance (DOF) office in Manila on Wednesday, National Economic Development Authority (NEDA) undersecretary Rosemarie Edillon attributed the “tighter” growth target band for this year to the below-target output in the first half of the year.
“For the year, we’re actually proposing a tighter band because we already have the first to third quarter numbers. But we it’s still the range of six to 6.5 percent because if we say it’s six to seven (percent) then, it’s no longer credible given that we already have the first three quarters,” she said.
Edillon said economic managers “want to stick (to) prudent fiscal management” and at the various tax reform programs and revenue projections, among others.
“We want to maintain a fiscal deficit to GDP (gross domestic product) ratio of 3.2 percent and also we want to make sure that does not balloon. This growth is consistent with the fiscal prudence,” she added.
Growth, as measured by GDP, averaged at 5.8 percent as of September this year, below the 6.5 to 7.5 percent set in the DBCC meeting last July. The 2021-2022 target band was seven to eight percent.
GDP posted a slower growth in the first two quarters, with the first quarter figure decelerating to 5.6 percent from quarter-ago’s 6.3 percent, and the second quarter to 5.5 percent.
Authorities attributed the weaker output to the impact of the delay in the approval of this year’s national budget, which prevented the government to spend on its infrastructure program, among others.
With this, economic managers implemented a catch-up spending program, which resulted to growth recovery in the third quarter to 6.2 percent.
Economic managers also maintained growth forecast at 6.5 to 7.5 percent in 2020.
Aside from the GDP, the DBCC also revised the Dubai crude oil price assumption for this year from $60-75 per barrel to $63-64 per barrel, and the 2020-2022 assumption from $60-75 per barrel to $55-70 per barrel.
The Philippine peso to United States dollar exchange rate was adjusted from P51 to P53 this year to P51-P52; while the 2020-2022 levels were changed from P51-P55 to P51-P54.
Rate of the one-year Treasury bill was also cut from 5.5 to 6.5 percent during the DBCC meeting last March to 5.1 to 5.3 percent; the 2020-2022 rates from five to six percent to 3.5 to 4.5 percent.
Growth of exports of goods was adjusted from two percent previously to one percent this year, and from six percent to four percent for 2020. Exports growth for 2021-2022 was kept at six percent.
Services exports growth was maintained at nine percent for 2019 until 2022.
Import of goods growth for this year was slashed from seven percent to two percent, but maintained at eight percent for 2020-2021.
Services imports growth assumption was reduced from three percent to two percent for this year, but is still at four percent for 2020 and five percent for 2021. (PNA)