Economic managers see 6-7% growth for PHL in ‘14

By Joan Santiago

MANILA, Jan. 7 (PNA) — Economic managers expect between six and seven percent growth of the Philippine economy in 2014, lower than the 6.5-7.5 target, due to below-target spending on account of judicial intervention and delay in reconstruction in Yolanda-affected areas.

Budget and Management Secretary Florencio Abad, in a briefing Wednesday, said the six to seven percent output, as measured by gross domestic product (GDP), was the “realistic” figure.

“(Revenue) collections have improved. Liability management have improved. Considering all of these things, to expect a growth of six to seven percent speaks well of the economy,” he said.

As of November 2014, total government revenues rose 11 percent to Php 1.74 trillion over year-ago’s Php 1.6 trillion.

Total expenditures during the 11-month period rose five percent to Php 1.76 trillion compared to the PHp 1.68 trillion in the previous year.

In the third quarter of 2014, output further slowed to 5.3 percent from quarter ago’s 6.4 percent and year-ago’s seven percent while the end-September output stood at 5.8 percent.

Despite the slower growth, the domestic economy posted its 11th over five-percent quarterly growth in the third quarter of 2014, among the highest in Asia to date.

Abad said government spending was below last year’s Php 266.2 billion target, which accounted for about two percent of GDP, because of “serious challenges of under-spending”.

This after the Supreme Court (SC) declared as unconstitutional some provisions of the Disbursement Acceleration Program (DAP) and the Priority Development Assistance Fund (PDAF).

Another reason was the lower-than-target reconstruction and rehabilitation spending in areas affected by Typhoon Yolanda.

Abad said these factors resulted in government spending that only accounted for about one percent of GDP.

He, on the other hand, noted that part of the drop in government spending was caused by lower interest payments as the government lessens its borrowings.

He said the drop in interest payments last November 2014 alone accounts for about 82 percent of the decline in expenditures but pointed out that this development was not necessary bad but instead was a positive change.

For 2015, the Budget and Management chief said they would exhaust all means to ensure that the spending target is met and account for two percent of GDP.

The government’s expenditure program for 2015 is Php 2.6 trillion and this includes spending the Php 22 billion supplemental budget approved by Congress in the latter part of 2014.

“Definitely for 2015 that (underspending) is not going to be tolerated,” he said and stressed that “2015 will be better in terms of macro and government spending.”

Relatively, the Development Budget Coordination Committee (DBCC) has decided to maintain its 2015 targets which included the growth target of seven to eight percent and peso-dollar assumption of 42-45.

However, the growth target for 2016 was cut to seven to eight percent from 7.5-8.5 percent previously because of the challenges posed by both domestic and external environment.

Abad said only the spending target for 2016 was changed.

He said that although growth was historically high during an election year, which for the Philippines is set to happen in 2016, economic managers decided to lower the growth target because of developments on-shore and abroad that are beyond the government’s control. (PNA)