Fiscal catch-up to underpin growth execution
From AB Capital's The Opening Bell: Three Moves
Event
Government plans a P1.44tn 1Q25 outlay to accelerate spending catch-up and has been urged to fast track contractor payments to boost infrastructure execution. Delays have constrained capex flow despite ample budget authorizations.
View
We think improved fiscal execution strengthens the near-term growth outlook by supporting aggregate demand and capex momentum. In our view, faster contractor payments can materially reduce project bottlenecks, improving infra delivery, confidence, and multiplier effects on linked sectors.
Catalyst
Catalysts include Treasury and DBM progress on payment reforms and clearer quarterly spending guidance. Upside risks are more frontloaded disbursements and better project pipeline clearing. Downside includes persistent procurement bottlenecks. Governance gains here can lift execution credibility over time.
Action
We see this as supportive for banks and construction/industrial names with infra exposure. We believe improved fiscal execution mitigates downside risks to GDP growth forecasts (AB Cap at 4.6% and 4.8% for 2026-27E, respectively).
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
- Latest
