Q1 growth likely faster, deficit wider on higher gov't spending

MANILA, Philippines - Sustained double-digit growth on spending likely accelerated economic growth to "at least 6 percent" in the first quarter, when the deficit also inevitably widened, officials said.

Infrastructure spending, in particular, was "very good" after procurement was advanced ahead of an election ban on disbursements late March, Budget Secretary Florencio Abad told The STAR.

"So if you combine election spending, accelerated spending as a result of advanced procurement of all agencies, and adjustments in government pay, you could grow by at least 6 percent," he said in an interview last Tuesday.

Revenues, in turn, "had no problem" supporting expenditures as commodity prices recover, Finance undersecretary and chief economist Gil Beltran said separately. 

Reports on first-quarter gross domestic product (GDP) and fiscal performance are up for release today.

GDP, or the sum of all products and services created in an economy, grew by 5 percent from January to March last year, the slowest in nearly four years.

While agriculture's 4.5-percent drop could have pulled GDP down, Abad expressed confidence this was offset by strong consumption from both consumers and the government.

"I was told by the (Public Works department) that 60 percent of their funds, they were able to obligate in the first quarter. So they are not affected by the election ban," the budget chief said.

"The higher the level of obligation, the higher the disbursement will be," he added.

Beltran said there were also enough funds to spend, especially since collections by the Bureau of Customs likely benefited from higher valuation of commodity prices.

Exports have slumped for 12 straight months and could be a negative to GDP growth, but oil prices were up by around half from last year.

The bulk of the country's oil requirements are imported. Higher product prices mean higher valuations where Customs collections are based.

"That's already positive because you are coming off from a weaker base last year. For BIR (Bureau of Internal Revenue), I don't see any problem," Beltran said.

BIR and Customs account for around 90 percent of state revenues. As of February, their collections were up 7 and 3 percent, respectively.

Abad said economic managers will turn over their macroeconomic assumptions to the next administration by July. 

Growth targets were set at 6.8 to 7.8 percent this year. The budget deficit cap was pegged at P298.6 billion, equivalent to 2 percent of GDP.

"This administration can spend half of the deficit limit and I think we could even fall below that," Beltran said.