Philippines likely to miss 2019 fiscal deficit target but on track to meet 2020 goal — HSBC
MANILA, Philippines — The Philippine government will likely miss its budget deficit target this year after the delayed approval of the national budget crimped state spending in the first quarter, a global bank said Friday.
Nonetheless, the government is poised to meet its fiscal deficit goal next year to make up for shortfalls this year and power economic growth.
“The government is actually well behind its 2019 spending plans due to the budget's delayed passage in Congress and the midterm elections in May,” HSBC Global Research said in a commentary.
“As a result, we believe the deficit target is unlikely to be reached by year-end,” they added. “We lower our 2019 fiscal deficit forecast to 2.4% of GDP from 3.1% previously in light of these delays.”
The Duterte government has been pushing for a wider budget gap to accommodate heightened infrastructure spending, particularly big-ticket projects in its “Build, Build, Build” program.
For 2019, the state has set the fiscal deficit ceiling at P624.4 billion, equivalent to 3.2% of gross domestic product.
On Thursday, the inter-agency Development Budget Coordination Committee, or DBCC, widened the budget deficit cap for 2020 until 2022 to 3.2% of GDP from 3% previously to “sustain the government’s investments on infrastructure and human capital development.”
This means the government will spend more than it will earn in the next three years in a bid to supercharge economic growth.
“This implies an expansionary fiscal stance ahead. We expect the gov't to meet its fiscal target in 2020, lifting growth to 6.4%,” HSBC said.
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