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Friday, March 29, 2024

DBCC keeps medium-term growth targets at 7% to 8%

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The inter-agency Development Budget Coordination Committee on Tuesday kept the government’s economic growth target in the medium term at 7 percent to 8 percent on higher fiscal spending.

Budget Secretary Benjamin Diokno said the improved fiscal program of the government, especially the ambitious P8.4-trillion ‘Build, Build, Build’ initiative, “is expected to boost economic expansion from 2018 to 2022.”

“We are on track to hit our fiscal targets especially with our shift to cash-based budgeting starting the fiscal year 2019,” Diokno said.

Economic Planning Secretary Ernesto Pernia said maintaining the economic growth target for 2018 would make the government work harder in reaching the medium-term goals, particularly in the area of tourism, which was one of the major drivers of economic growth.

“Regarding the possible shortfall in tourist arrivals due to the Boracay closure, DoT [Department of Tourism] will have to step up its efforts at advertising and marketing our several other tourist destinations, so the same volume of tourists, if not more, will be diverted to these other beautiful locations,” Pernia said.

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Diokno said all the efforts of the government were expected to drive socio-economic development where the poverty rate was targeted to decline from 21.6 percent in 2015 to at least 14 percent by 2022.

The medium-term revenue program was revised upwards, considering the impact of package 1A and 1B of the Comprehensive Tax Reform Program. 

This put programmed revenues for fiscal year 2018 at P2.846 trillion, higher by P57.3 billion compared to the previously approved level of P2.789 trillion.

The economic managers said packages 1A and 1B of the CTRP would contribute P124.9 billion this year, rising to P215.8 billion in 2022.  Total revenues are projected to rise from 16.3 percent of GDP in 2018 to as much as 17.5 percent of GDP by 2022, or a nominal amount of P4.485 trillion.

Finance Secretary Carlos Dominguez III said the projected increase in the government’s revenue take arising from the implementation of the Tax Reform for Acceleration and Inclusion and the succeeding packages of CTRP would strengthen the good fiscal position of the Duterte administration.

Dominguez said it would let the government “pursue an aggressive investment policy anchored on much higher spending on infrastructure and human capital development over the medium term.”

The disbursement program was also increased in light of favorable revenue projections. Disbursements this year are now targeted to reach P3.370 trillion, up from the previous level of P3.313 trillion.

Disbursements are targeted to rise from 19.4 percent of GDP in 2018 to 20.5 percent of GDP in 2022.

The DBCC maintained the medium-term deficit target at 3 percent of GDP. The programmed deficit is set at P523.7 billion in fiscal year 2018 and increasing to P774.3 billion in 2022.

Meanwhile, the financing program for 2018 remained at 65 to 35 mix, in favor of domestic borrowings. Economic managers said with the pre-funding exercise in the sale of treasury bonds in fiscal year 2017, “there is a lower requirement for local financing in 2018.”

DBCC also maintained the inflation forecast of 2 percent to 4 percent from 2018 to 2022.

It raised the peso-dollar exchange rate assumption to 50 to 53 per dollar from an earlier estimate of 49 to 52 that was announced by the DBCC in December last year.

Exports are expected to grow 9 percent this year and 8 percent annually from 2019 to 2022.

Imports are expected to grow 10 percent in 2018 and 9 percent in 2019 to 2022.

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