June 18, 2011, BusinessWorld

The Government has set a higher economic growth goal for 2012, with more projects under the public -private partnership (PPP) scheme expected to get off the ground.
The inter-agency Development Budget Coordination Committee (DBCC), which sets macroeconomic targets, on Saturday set a gross domestic product (GDP) growth goal of 5.5-6.5% for next year from 5-6% for this year.

Some projects under the PPP scheme have been slated for bidding this year but most will take off beginning next year.

Composed of the chiefs of the Finance and Budget departments, the National Economic and Development Authority, the central bank as well as a representative of Malacañang, the DBCC convened on Saturday principally to deliberate on the 2012 budget and its attendant macroeconomic targets.

The government set as well a “fighting” target of 7-8% GDP growth for next year, with Finance Secretary Cesar V. Purisima telling BusinessWorld after the DBCC meeting that “We will continue to aspire for the highest level of growth possible.”

To attain this, he added, “The government has to pursue structural adjustments — investments in infrastructure, reforms to boost competitiveness and simplified regulations.”

The government also aspires for credit ratings higher than the “speculative” grade Standard & Poor’s, Moody’s and Fitch have given Philippine bonds, Mr. Purisima said.

The 5.5-6.5% growth goal serves as the basis for the 2012 budget, which Budget Secretary Florencio B. Abad said could reach as high as P1.84 trillion, as it has been set 8-12% higher than this year’s P1.645 trillion outlay.

Revenue and expense figures have not been finalized yet, with the DBCC still to present its preliminary numbers to President Benigno S.C. Aquino III on Tuesday, and to the Cabinet on June 29.

Malacañang wants to submit the 2012 budget to Congress when it reconvenes on July 25 to start its second regular session to make sure the spending plan is ready when the new year rolls in.

Still, without the revenue and expense numbers, the fiscal deficit for next year has been pegged at P270 billion, equivalent to 2.6% of the projected P10.2865-trillion GDP. This is in line with the goal of bringing the budget gap to only 2% of GDP by 2013.

This year, the government is hoping to cap the deficit at P300 billion or 3.2% of GDP.

The Finance department, given the smaller deficit for next year, said the government will borrow less. Finance Undersecretary Rosalia V. de Leon told reporters at the sidelines of the DBCC deliberations that borrowings from external creditors will go down to P178.4 billion from P191.9 billion this year, and from domestic creditors, P549 billion from P639 billion this year.

The government borrows money from foreign and domestic creditors to plug its deficit and refinance its obligations.