Gov’t infra push not affected by Fed move

ECONOMIC managers said the government’s spending program will remain unaffected by the Federal Reserve’s decision to raise interest rates, with the move described as highly anticipated and long planned for.

The Fed raised interest rates yesterday to 0.75% from 0.50%.

The December hike has been flagged since September, when the Federal Open Market Committee noted improving economic conditions in the US.

Budget Secretary Benjamin E. Diokno said, the government has long prepared for a tightening in US monetary policy. “This is the most anticipated move by the Fed, hence won’t change our fiscal program, especially the expenditure plan,” Mr. Diokno said in a text message.

Finance Secretary Carlos G. Dominguez III added that the government remains committed to its infrastructure buildup.

“The domestic economy remains strong and is resilient enough to ride out the initial impact of such an external shock as the Fed hike, more so with its commitment to go full steam ahead on its aggressive infrastructure program that will be a major growth driver on the Duterte watch,” he said.

Both chambers of Congress ratified the P3.36 trillion budget for 2017 on Wednesday, with the appropriations bill now awaiting the President’s signature.

Finance Undersecretary Gil S. Beltran said the government took into account the possibility of a US rate hike, and no disruptions are expected to the government’s 10-point socioeconomic agenda. “We have programmed for the Fed normalization,” he said.

The economic managers also said that the economy will remain resilient in the years ahead even if the Fed signalled its intention to hike rates as many as three times in 2017.

“The outlook is still favorable given our country’s sound macroeconomic fundamentals,” said Mr. Beltran.

Mr. Diokno added: “We expect the fed adjustment to be between 0.25-0.5% in the next 12 months,” he said.

The Budget Secretary also added that assumptions for 2017 are still intact. The government targets a growth rate of 6-7% for gross domestic product.

Mr. Diokno will meet with other officials in the Development and Budget Coordinating Committee meeting — which he chairs — next week, to discuss the outlook for 2018. —