TRAIN to add P500 B spending power to government

MANILA, Philippines — The Philippines is expected to gain an additional spending power of around P500 billion each year due to the government’s expansionary fiscal policy and the impact of the tax reform bill, the Department of Budget and Management (DBM) said yesterday.

During the 43rd Philippines Business Conference and Expo yesterday, Budget Secretary Benjamin Diokno assured businessmen that the Philippines would have enough budget to cover the requirements for the administration’s massive infrastructure program.

“As far as the (infrastructure program) is concerned, there will be no problem with the budget. We are pursuing an expansionary fiscal policy where we have increased the deficit-to-GDP ceiling from two to three percent,” Diokno said.

“(In addition), because of the ongoing tax reform program, we expect an additional fiscal space of around P500 billion a year. That’s additional spending power,” he said.

The government is projected to spend P3.36 billion next year up 15  percent from P2.91 billion this year, according to the Budget of Expenditures and Sources of Financing (BESF) document of the DBM.

Initial estimates showed this is projected to go up further to P3.82 billion in 2019 and P4.27 billion in 2020.

The Duterte administration is planning to embark on a massive infrastructure program, which is seen to require as much as P9 trillion in investments over the medium term.

To support this program, economic managers have raised the budget deficit ceiling to three percent of gross domestic product. This deficit will be plugged by borrowings, 80 percent of which will come from domestic sources, and the rest from foreign lenders.

Despite the strategic increase in fiscal deficit, Diokno said the country’s debt-to-GDP ratio would remain manageable and continue to shrink to about 37 percent from the current 40 percent.

In addition, revenue gains from the Tax Reform for Acceleration and Inclusion Act (TRAIN), which is expected to be implemented in January 2018, will also be earmarked for the Build, Build, Build program.

Meanwhile, Diokno said China and Japan are set to sign agreements with the Philippine government during their respective leaders’ visits to Manila for the 31st ASEAN Summit and Related Meetings in November.

He said this will be part of the $9 billion investment and assistance pledged by China and Japan earlier.