Govt targets could be adjusted – Recto
THE government might have to revise its macroeconomic assumptions given last year’s below-target growth, Finance Secretary Ralph Recto said.
“We’re discussing that right now because I think we have to come out with more realistic targets,” he told reporters last Thursday.
“I think we need to [make some adjustments]. Something more realistic but still high for 2024 and beyond.”
The economy grew by 5.6 percent last year, below the government’s 6.0- to 7.0-percent target, amid global headwinds and a high interest rate environment.
Gross domestic product (GDP) growth is again expected to miss this year’s target, which economic managers last month narrowed to 6.5-7.5 percent from the previous 6.5-8.0 percent.
Recto, who was not yet part of the economic team in December, said global headwinds were likely to keep weighing on growth.
“The fiscal plan was made when BBM (President Ferdinand “Bongbong” Marcos Jr.) became president in 2022, before the Middle East war and the early stages of the Ukraine war,” he noted.
At the very least, spending levels will be maintained to support economic growth.
Government expenditures grew by just 0.4 percent last year, which Socioeconomic Planning Secretary Arsenio Balisacan has said was in line with a fiscal consolidation program.
“Hopefully, we can even improve it for as long as the deficit is going down and your debt-to-GDP ratio is going down,” Recto said.
The ratio improved to 60.2 percent last year, down from 60.9 percent in 2022, but was below the targeted 61.2 percent.
The government is aiming for a debtto-GDP ratio of less than 60 percent by 2025 and 51.1 percent by 2028. It also wants to trim the deficit to GDP ratio to 3.0 percent by 2028 and keep infrastructure spending at 5 to 6 percent of GDP per year.
The interagency Development Budget Coordination Committee met last week to discuss the Medium-Term Fiscal Framework’s targets and the country’s growth outlook.
The National Economic and Development Authority said it was “committed to achieving the government’s growth targets this year by incorporating the lessons learned in 2023 … this 2024.”