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Kids stroll on a bike at Marikina Riverbanks on July 11, 2021.
The STAR/Michael Varcas

Gov't keeps growth goals, eyes record P5.02-T budget in Duterte's final year

Ian Nicolas Cigaral (Philstar.com) - July 19, 2021 - 7:01pm

MANILA, Philippines — The Duterte administration is sticking to its current economic outlook and is preparing a record budget for its final year in a bid to help the economy recover from a pandemic-induced crash.

A “declining” number of Covid-19 infections in the country and “gradual” reopening of the economy convinced the Cabinet-level Development Budget Coordination Committee (DBCC) to retain their gross domestic product (GDP) growth target to 6-7% this year. In 2022, the middle of which would see a new government take office, the growth target is kept at 7-9%.

Last year, the economy shrank a record 9.6% year-on-year.

At the same time, economic officials approved a budget proposal for next year amounting to a record P5.02 trillion, 11.5% bigger than this year’s outlay. The proposed budget for 2022 would continue the Duterte government’s investments in infrastructure while also providing funds for pandemic response, the DBCC explained.

“To support this outlook, the DBCC emphasized its support to manage risks and continue the gradual and safe reopening of the economy, subject to the strictest compliance to minimum public health standards,” the DBCC said.

Economic managers were earlier prompted to water down their growth ambitions after a disappointing 4.2% contraction in the first quarter that was worse than anticipated by observers. As it is, hitting the current goals appears easier said than done, as the Philippines would have to grow an average of 10% in the remaining three quarters of 2021 alone, Socioeconomic Planning Secretary Karl Kendrick Chua earlier said.

This means the economy would need to muster that growth while possibly grappling with on-off lockdowns this year, a scenario that is now not as far-fetched as it might sound after the country recently detected local cases of the fast-spreading Delta variant. To prevent this from happening, the DBCC said the “relaxation of quarantine restrictions in high-risk areas must be complemented with an accelerated vaccination roll-out”.

“The DBCC remains committed to restoring jobs and building a stronger and more competitive economy, while sustaining the Duterte Administration’s legacy of real change for future generations,” they added.

Meanwhile, apart from GDP, economic managers revisited as well the rest of their macroeconomic assumptions and spending plans. Some changes are reflected on tables below:

2021 macroeconomic assumptions

Indicator May DBCC meeting July DBCC meeting
GDP growth/ (contraction) (%) 6-7 6-7
Inflation (%) 2-4 2-4
Dubai crude ($/barrel) 35-50 50-70
Peso-dollar exchange rate 48-53 48-53
Goods export growth (%) 8 10
Goods import growth (%) 12 12

2022 and 2023 assumptions

Indicator 2022 2023
GDP growth (%) 7-9 6-7
Inflation (%) 2-4 2-4
Dubai crude ($/barrel) 50-70 50-70
Peso-dollar exchange rate 48-53 48-53
Goods export growth (%) 6 6
Goods import growth (%) 10 8

Budget program

Indicator 2021 2022 2023 2024
Revenues (in trillion pesos) 2.88 3.29 3.59 4
Expenditures (in trillion pesos) 4.74 4.95 5.02 5.30
Surplus/ (Deficit) (% of GDP) (9.3) (7.5) (5.9) (4.9)

 

NOVEL CORONAVIRUS PHILIPPINE ECONOMY
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