Source: BusinessWorld
The interagency Development Budget Coordination Committee (DBCC), which met on Saturday to discuss next year’s outlay, approved a 5.5-6.5% gross domestic product (GDP) growth assumption — up from this year’s 5-6% — along with other macroeconomic goals.
The “fighting” economic growth target for next year, however, remains the previously announced 7-8%, officials said.
“We are more positive about the economy… fiscal consolidation plans are starting to bear fruit,” Budget Secretary Florencio B. Abad told BusinessWorld.
He pointed to PPP deals scheduled to be bid out later this year — 12 big-ticket infrastructure projects worth a total of P156.69 billion have been announced — and said the government was also looking to build on investment gains notched so far.
“Domestic investors see the changes that are happening here. It will only be a matter of time before foreign investors follow,” Mr. Abad claimed. “Global events that caused some anxiety this year, like the MENA (Middle East and North Africa) crisis and the disaster in Japan, are also passing.”
Finance Secretary Cesar V. Purisima, in explaining the retention of the official 7-8% GDP growth goal, said: “We will continue to aspire for the highest level of growth possible.”
Other macroeconomic targets approved by the DBCC for next year, meanwhile, include a deficit of P270 billion, equivalent to 2.6% of the P10.2865-trillion GDP. This is in line with fiscal consolidation plans that target a shortfall of only 2% of GDP by 2013.
The government is hoping to cap this year’s deficit to only P300 billion or 3.2% of GDP.
Given the smaller deficit, the Finance department is also planning to borrow less next year.
External borrowings will go down to P178.4 billion from P191.9 billion this year, Undersecretary Rosalia V. de Leon said on the sidelines of the DBCC meeting, while only P549 billion will be sourced domestically, down from P639 billion.
Several economists asked to comment on the 2011 budget assumptions said they were not as bullish as the government.
While “conservative,” the 5.5-6.5% growth goal is “still on the optimistic side,” University of the Philippines economist and former Budget Secretary Benjamin E. Diokno said.
Former Finance Undersecretary Romeo L. Bernardo cautioned that growth drivers such as electronics exports, business process outsourcing and overseas Filipino worker (OFW) deployment could taper off “due to base effects and possibly, skill supply.”
Messrs. Bernardo and Diokno said they looked forward to the PPP program taking off but qualified the deals may have only a “modest impact.”
University of Asia and the Pacific economist Cid L. Terosa said achievement of 5.5% growth was “more probable.”
Exports and OFW remittances could increase as destination countries improve their economies, he told BusinessWorld in a text message.
Local governments are also expected to ramp up spending with elections coming up in 2013. — Diane Claire J. Jiao
