Japanese financial group Nomura said over the weekend the Philippines can still hit the low end of the government’s 2019 growth target range of 6 percent to 7 percent as it ramps up fiscal spending to offset the sluggish expansion in the first half.
Nomura, in a report, noted the sharp rise in overall fiscal spending that drove the fiscal deficit to a record level in September 2019, led by growth in public sector capital spending which surged 53.8 percent year-on-year based on data from the Budget Department.
“This reflects progress on the government’s catch-up spending plans on infrastructure projects,” Nomura said.
“The government has a strong incentive to close any remaining under-spending gap to meet its 2019 GDP growth target of 6 percent and indeed, public sector capex [capital expenditure] has been a key driver of import growth in the last few years,” Nomura said.
The economy expanded by 5.5 percent in the first half, below the target range because of the delay in the approval of the P3.7-trillion national budget for 2019.
The government effectively operated on a reenacted budget for the entire first quarter because of the delayed approval of the budget.
Finance Secretary Carlos Dominguez III said earlier the government was planning to spend around P1.14 trillion in the fourth quarter to hit its total program disbursement target of P3.769 trillion for 2019.
“To attain this target, the government needs to disburse P1.14 trillion or 30 percent this fourth quarter. Based on the updates of our main infrastructure agencies, we are confident that we are going to hit our spending target this year,” Dominguez said in a statement.
The Bureau of the Treasury reported last week that the government incurred a budget deficit of P178.6 billion in September, or 85.52 percent higher than the deficit of P96.2 billion a year ago, as spending posted its highest monthly growth for the year that outpaced revenue collections.
Data showed that expenditures in September grew by 39 percent to P415.1 billion from P298.6 billion a year ago, while revenues rose 16.89 percent to P236.5 billion from P202.4 billion.
This brought the budget deficit in the first nine months to P299 billion, still down 20.95 percent from P378.2 billion a year ago. This was also 18 percent lower than the programmed deficit of P364.7 billion for the period.
The Treasury said the “government spending continued to pick up and notched its highest monthly growth, while revenue growth was second only to May of this year.”