MANILA -- Economic think-tank Fitch Solutions said the Philippine government’s 2019 budget deficit is likely to remain at 2.9 percent of gross domestic product (GDP), within the Duterte administration’s 3.2 percent deficit to GDP ratio target.
While remaining within target, the forecasted budget gap to GDP ratio is still higher than the 2.2 percent level in 2017, the research firm said in a report Tuesday, January 8.
“Downside risks to macroeconomic stability are rising as a result of loose and monetary policies, although the Philippines remains on good standing for now,” it said.
Data from the Bureau of the Treasury (BTr) showed that the budget gap as of end-November 2018 stood at PHP477.2 billion, 96 percent up from year-ago’s PHP243.5 billion.
This, as total revenues rose 16 percent to PHP2.618 trillion while expenditures posted a faster growth of 24 percent to PHP3.095 trillion.
The 2018 deficit target is PHP523.68 billion, which accounts for three percent of GDP.
Fitch Solutions expects the government’s budget gap to remain high in line with the Duterte administration’s “strong commitment to its expansionary fiscal agenda.”
It cited the government’s massive infrastructure program called “Build, Build, Build”, which is seen to raise the country’s productivity and competitiveness, as a factor for the increase in spending.
Relatively, it noted that downside risks to macroeconomic stability are rising, citing the weakening of the peso and the decline of foreign exchange reserves.
It also said that “interest rates remain very accommodative” since domestic growth remains strong. (PNA)
