The economy as expected grew at a slower pace in the first quarter of 2019 after both chambers of Congress took a longer time in passing the 2019 budget. The gross domestic product expanded at a four-year low of 5.6 percent in the first three months of the year, the slowest growth in 16 quarters, or since 5.1 percent in the first quarter of 2015.
Economic managers warned earlier that a delay in the approval of the 2019 spending program and a reenacted 2018 budget would reduce government's spending program and, eventually, curtail growth. President Rodrigo Duterte finally signed the P3.7-trillion national budget for 2019 in April after the long impasse between the two houses of Congress.
Economic Planning Secretary Ernesto Pernia noted that the economy “should have grown by as much as 6.6 percent this first quarter if we were operating under the 2019 fiscal program.” The first-quarter GDP figures told the story. Government expenditures rose just 7.4 percent in the first quarter, slower than 13.6 percent a year ago, while public construction contracted 8.6 percent because of the constraints under the reenacted budget.
Finance Secretary Carlos Dominguez III said the economy could have received a “tremendous boost” from a much higher state spending on infrastructure modernization and human capital formation at the start of 2019 if the Senate and House resolved the budget impasse early.
Government spending under the reenacted budget as a result dropped in the first three months of 2019 by some P75 billion. Dominguez said the cutback meant a “lost opportunity to fund new infrastructure projects, a setback aggravated by the public works ban this election campaign period.” Data from the Bureau of the Treasury showed that national government disbursement fell 8 percent to P287.3 billion in the first three months.
Economic managers expect the economy to grow at a more robust pace in the succeeding quarters with the 2019 budget finally signed by President Duterte. Lawmakers, meanwhile, should quickly set aside their differences in deliberating future budget proposals. Hundreds of thousands of jobs, vital social services and major infrastructure projects should not be held hostage by useless bickering in Congress.
