Philippines: Gov’t could have topped 2018 deficit cap

  • As a developing economy, the Philippines operates on a budget deficit by spending more than what it collects in order to boost economic activity and overall growth.
  • Budget Secretary Benjamin E. Diokno said the fiscal gap likely hit an equivalent of 3.1% of gross domestic product (GDP) in 2018, an “emerging” estimate based on initial data. If realized, this would be slightly bigger than the programmed 3% ratio and wider than the 2.2% logged in 2017.
  • The budget balance posted a PHP477.2bn shortfall as of Nov 18, which was already 91% of the PHP523.7bn gap programmed for 2018.
  • That came as state spending surged by a fourth to PHP3.095tr, against a 16% rise in revenue collections to PHP2.618tr. The spending surge was led by infrastructure
  • Looking ahead, Mr. Diokno said the government hopes to sustain spending in 2019 despite hurdles like the delayed passage of the national budget as well as the request to remove 45-day public works ban ahead of the 13 May 19 mid-term polls so that there will be little disruption in our ‘Build, Build, Build’ program.
  • Finance Secretary Carlos G. Dominguez III has said that the delayed budget is estimated to affect some PHP46bn worth of delayed projects in 1Q19, noting this would surely hurt growth for the period.
  • The public work ban request also hinges on enactment of the 2019 budget, now languishing in a bicameral conference where lawmakers scuffle over spending plan details.
  • The Duterte administration is looking for ways to prod economic activity further, following 6.2% gross domestic product growth clocked in 2018 that settled below the government’s downward-adjusted 6.5-6.9% target. For 2019, the goal is for overall economic growth to hit 7-8%.

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