The Philippine economy can grow up to 8 percent in the medium term, on the expected increase in infrastructure spending under the government’s ambitious P8.4-trillion ‘Build, Build, Build’ program, the Finance Department said Wednesday.
The Finance Department said in an economic bulletin the strong fiscal fundamentals would continue to sustain the robust economic growth and stable inflation.
“In the medium-term, infrastructure outlays under the ‘Build, Build, Build’ program will exceed 5 percent of GDP [gross domestic product] and push GDP growth to its optimum level of 7 to 8 percent as the competitiveness of the economy rises and more jobs are created,” it said.
It issued the bulletin a day after the Bureau of the Treasury reported that full-year spending hit P2.823 trillion in 2017, or 3 percent short of the programmed P2.909-trillion fiscal expenditures for the year.
The Finance Department said fiscal reforms including debt management led to the maintenance of the debt-to-GDP ratio at 42.1 percent as of year-end 2017. Interest payments as a ratio of GDP declined 0.1 percentage point, expenditures by 0.9 percentage point and revenues by 1.3 percentage points. Debt service ratios declined at a similar pace.
The government projected that economic growth this year could settle between 7 percent and 8 percent, driven by higher spending on infrastructure and robust investments.
Data showed the government’s budget deficit in 2017 slightly narrowed to P350.6 billion from P353.4 billion in 2016, because of the combined effects of stronger-than-programmed receipts and slower expenditure growth.
The Treasury also said the 2017 deficit was 27-percent short of the year’s target of P482.1 billion. It said the narrower deficit was equivalent to 2.2 percent of GDP, within the 3-percent ceiling set for the year.
Data showed the 2017 revenue collection hit P2.47 trillion, exceeding the program of P2.426 trillion by 2 percent. It was also 13 percent, or P277.2 billion higher than P2.195 trillion collected in 2016.
Government expenditures increased 11 percent, or P274.4 billion, to P2.823 trillion last year from P2.549 trillion in 2016. It was, however, 3 percent below the programmed spending of P2.909 trillion for the year.
The Treasury said that in December alone, the budget deficit narrowed 9 percent to P107.1 billion from P118.2 billion a year ago. Revenues grew 35 percent in December to P223.1 billion from P165.3 billion a year earlier while spending rose 16 percent to P330.2 billion from P283.6 billion.
The Bureau of Internal Revenue collected P151.2 billion in December, up 29 percent or P34 billion from the final month of 2016, marking its highest year-on-year growth for 2017.
Full-year BIR collections totaled P1.772 trillion, missing the program by 1 percent but rising 13 percent from a year ago.
“BIR collection is net of the P8.5-billion tax refund paid to various claimants for the year. Inclusion of the tax refund will drive total collection to P1.780 trillion,” the Treasury said.
The government said disbursements in December amounted to P330.2 billion, up 16 percent year-on-year for a full-year total of P2.823 trillion. Of the total, 89 percent were for primary expenditures, while the remaining 11 percent went to interest payments.