By Cai Ordinario, March 14 2019; Business Mirror
Image Credit to Business Mirror
A REENACTED budget will likely result in the lowest GDP growth rate that the Philippines will see in nearly a decade as it would hamper jobs creation and the implementation of publicly funded projects.
The National Economic and Development Authority (Neda) said GDP growth could slow to 4.2 to 4.9 percent. If the government will operate under a reenacted budget for the rest of the year, the projected GDP growth is the lowest since 2011, when it reached 3.7 percent.
If the budget impasse is resolved by April, full-year GDP growth could slow to 6.1 to 6.3 percent. A reenacted budget until August will cause the economy to expand by 4.9 to 5.1 percent this year.
“Thus, we call for the immediate passage of the 2019 budget. The longer we wait, the more adverse the effect will be,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement.
Apart from the damage on the economy, the reenacted budget will cost as much as 180,000 to 240,000 more jobs and fail to lift 400,000 to 550,000 more Filipinos out of poverty this year.
Pernia also said a reenacted budget will delay new and ongoing infrastructure projects, as well as the implementation of public social services such as the Unconditional Cash Transfer and Pantawid Pasada Program.
The Philippine economy grew by 6.2 percent in 2018, lower than the government’s revised target of 6.5 to 6.9 percent. This is also lower than the 6.7 percent and 6.9 percent recorded in 2017 and 2016, respectively, largely due to the spikes in inflation last year.
In terms of jobs, the government is targeting to create over a million jobs annually until 2022. This will be fueled by the government’s massive infrastructure spending of P8 trillion to P9 trillion until 2022.
“Even with this, the economy has been steadily growing by at least 6.0 percent for seven consecutive years. Also, in the first ten quarters of the administration, the economy has been growing at an average of 6.5 percent. We need to sustain this momentum, or even accelerate it, now with inflation rate down and within our target range,” Pernia said.
Based on documents obtained by the BusinessMirror, the national government intends to spend P4.71 trillion in the next three years for ongoing and new projects identified under the three-year rolling infrastructure plan (TRIP).
Neda said the amount covers around 7,401 projects. The TRIP is the government’s tool to strengthen the link between programming and budgeting. It ensures that the right types or the needed projects are included in the pipeline and are accordingly funded.
This includes P3.42 trillion for 4,376 projects under Tier 1 or ongoing projects and P1.287 trillion or 4,376 projects in Tier 2 or new and/or expanded projects
In order to maximize government resources, the pipeline list of Trip projects will include Tier 1 and Tier 2 projects. Tier 1 will be composed of ongoing projects that need to have continuous funding in the next three years while Tier 2 includes “new” projects.
Meanwhile, the majority or 71.19 percent or P3.35 trillion of the funds to be used for these projects are from the national budget, while 25.18 percent or P1.185 trillion will be obtained from Official Development Assistance.
Around 2.51 percent or P118.32 billion will be financed through corporate funds of government-owned and -controlled corporations; 0.58 percent or P27.09 billion will be from joint ventures; and 0.54 percent or P25.56 billion will be financed through public -private partnerships.