REENACTED BUDGET TO PROMPT BELOW 5% GROWTH
According to him, the country’s growing population alone is enough to constrain continued economic growth
Local output measured as the gross domestic product (GDP) could slow down enough to contract in 2020 should there be another budget delay, Socioeconomic Planning Secretary Ernesto Pernia said on Thursday.
This was his reply to a query from Rep. Benny Abante at the budget hearing on Thursday on the worst that could happen should there be another reenacted budget. Abante popped the question at the meeting with the Cabinet-level Development Budget Coordination Committee or DBCC meeting.
In no uncertain terms, Pernia said the Philippines will likely display regressing economic performance in 2020 with growth “probably below 5 percent or something of that order” should the proposed spending plan for the period is not legislated promptly.
According to him, the country’s growing population alone is enough to constrain continued economic growth.
“It’s not going to be good because our population is growing fast. Population growth is lower now but in terms of absolute increases in the population, is quite substantial, about 2 million a year,” the Cabinet official said.
“So, we have many needs in infrastructure. Government spending and even private spending on fixed capital formation will be hampered by a reenacted budget as well,” he added.
He said the below 6 percent growth witnessed in the first two quarters of the year came to pass even though election-related spending was supposed to provide some of the growth triggers.
“Our growth regressed. We could have achieved 6.5 percent but we only did 5.5 percent (in second quarter). That’s a full percentage point regression in economic growth,” Pernia pointed out.
“That’s why we’re praying, ee’re hoping that it (the budget delay) is not going to happen again,” he added.
Earlier, the Cabinet official said that with GDP at only 5.6 percent in the first quarter and 5.5 percent in the second quarter, the economy requires growth averaging at least 6.4 percent in the second half this year to secure the low end of the government’s 6 to 7 percent growth target.
Following the submission of the proposed P4.1-trillion budget for 2020 to Congress, the National Economic and Development Authority (NEDA) has called on the legislature to pass the proposed budget for 2020 promptly to ensure continued economic growth.
That’s why we’re praying, ee’re hoping that it (the budget delay) is not going to happen again.
Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia urged Congress to pass the budget bill on time on Day 1 of the budget deliberations at the House Committee on Appropriations.
“We need at least 6.4 percent of economic growth in the second half of the year to meet our (economic growth) target of 6 percent in 2019. That is why we are hoping for a timely passage of the 2020 national budget so as not to derail next year’s economic growth,” Pernia said.
According to him, the NEDA will push for extending the validity of the P3.7 trillion budget for 2019 since its passage into law was delayed repeatedly due to lengthy congressional debates.
The passage of this year’s budget was delayed after lawmakers debated over whether it should be cash-based budget where agencies are obliged to disburse all of their budget or lose it, and on whether certain budget realignments proposed by certain members of the House and the Senate favored some over the others.