DBCC raises 2019 budget deficit ceiling
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The Duterte administration raised its deficit spending ceiling next year to support the government’s ambitious infrastructure program, the inter-agency Development Budget Coordination Committee (DBCC) said.
Following the meeting of President Rodrigo R. Duterte’s economic managers yesterday, the DBCC raised its budget deficit program for 2019 from 3.0 percent to 3.2 percent of the economy, as measured by the country’s gross domestic product (GDP).
Finance Secretary Carlos G. Dominguez III said the two percentage point increase in deficit ceiling is aimed at maintaining the government’s “aggressive" spending strategy.
“That will sustain the momentum of the ‘Build, Build, Build’ program,” Dominguez said. “We assure our people that the government remains committed to fiscal discipline even as it pursue a high level of productive spending that will clear the way to high — and inclusive — growth.”
The increase in deficit-to-GDP ratio also raised the government’s nominal fiscal gap by 8.0 percent to R624.37 billion from the previous assumption of R579.23 billion.
Dominguez, however, explained that the rise in deficit spending will not impact the government’s current investment grade credit rating status.
For 2019, the government programmed its disbursements to hit R3.833 trillion, equivalent to 19.8 percent of GDP and higher by 16 percent compared with R3.369 trillion this year.
Budget Secretary Benjamin E. Diokno, meanwhile, said the Duterte administration will be submitting to Congress its R3.757 trillion proposed national budget for next year on the same of the President’s state of the nation address.
Diokno added that the government will shift to cash-based budgeting next year, which is projected to enhance the efficiency of the Duterte administration’s disbursements.
“Government spending will continue top be a growth driver for the Philippine economy, especially as we invest on public infrastructure and human capital development,” Diokno said.
“We are optimistic that we will virtually eradicate under-spending in fiscal year 2019, as we transition of cash-based budgeting,” he added.
The DBCC, meanwhile, maintained its GDP target at 7.0 percent to 8.0 percent for next year until 2022, along with its inflation target at 2.0 percent to 4.0 percent, but raised its upper-end inflation forecast from 4.0 percent to 4.5 percent.
Socioeconomic Planning Secretary Ernesto M. Pernia said the government remains optimistic to hit its economic growth target for the medium-term on the back of higher household consumption from job expansion, as well as increased infrastructure spending.
Pernia also believes the brighter prospects for the tourism sector will provide additional boost to the economy.
“We also expect higher public and private investments through a reduction in the cost of doing business and reduced foreign investment restrictions,” he said.
The DBCC also maintained its Dubai crude oil price at $50 to $65 per barrel, foreign exchange rate R50 to R53, exports at 9.0 percent and imports at 10 percent.