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MANILA – An economist of a global investment bank forecasts a solid finish for the Philippine economy this 2019 as it discounts a repeat of last year’s delay in the approval of the national budget.
In a report, Nomura economist Euben Paracuelles forecasts that “Congress is on track to pass the 2020 budget before year-end” since this supports “our view that another budget delay is unlikely next year.”
He said without the negative impact of the delay in the approval of the national budget on growth, gross domestic product (GDP) this year might average at 6 percent and improve to 6.7 percent next year.
He cited news reports about the unanimous decision of Senators to approve on third and final reading the proposed PHP4.1 trillion 2020 national budget on Wednesday.
“This paves the way for the bicameral committee to start deliberations on 29 November to reconcile any differences from the lower house version before sending it for President Duterte’s signature,” he said.
He is optimistic that a recurrence of last year’s issues on the national budget and its impact on domestic growth is not expected this year since the House of Representatives has approved its version of next year’s national budget last September 20.
“This appears to leave the bicameral committee with sufficient time to agree on a final version of the budget before Congress goes on recess on 20 December, and indeed for the president to enact the budget before the start of the new year,” he said.
He said: “Although, admittedly, we think it is still possible for deliberations in the committee to take longer if there are difficulties in ironing out some differences, a budget delay as lengthy as the four-month delay this year now seems highly unlikely.”
He noted that on Nov. 26, the Senate also approved a bill to extend the validity of the 2019 budget until Dec. 31, 2020.
“This is relevant because, after the shift to cash-based budgeting, government agencies are required to spend their allocations within the fiscal year. So the four-month delay to passing the 2019 budget necessitated the extension of its validity beyond this fiscal year to allow for the disbursement of any remaining unspent allocations in the early part of 2020, instead of being sent back to the treasury,” he said.
In the first half this year, growth, as measured by GDP, averaged at 5.5 percent, lower than the full-year target of 6 percent to 7 percent.
Growth in the first quarter slipped to 5.6 percent from quarter-ago’s 6.3 percent and this further slid to 5.5 percent in the second quarter of the year.
Authorities attributed this to the impact of the delay in the approval of the national budget, which hampered the government’s ability to finance its projects.
The 2019 national budget was signed into law only last April 15.
This, along with the election ban, which prevented the implementation of most infrastructure programs, resulted in the slower domestic expansion in the first six months this year.
However, with the help of a catch-up infrastructure program domestic expansion in the third quarter recovered to 6.2 percent, bringing the year-to-date output to 5.8 percent.
The government’s 2020 growth target is a range between 6.5 percent and 7.5 percent. (PNA)
