The inter-agency Development Budget Coordinating Committee (DBCC) has raised some of the government’s economic targets as a result of domestic and overseas development, Budget Secretary Benjamin Diokno said.
It, however, kept the 6.5 to 7.5 percent gross domestic product (GDP) target for 2017 and the seven to eight percent target for 2018 to 2022 along with the two to four percent inflation target for 2017 to 2020. Until last November, the inflation rate averaged at 3.2 percent.
“We think we’re doing well that we didn’t find a need to change much of our assumptions until 2022,” Diokno said.
The DBCC is chaired by the Secretary of the Department of Budget and Management and other members are officials from the Department of Finance, Bangko Sentral ng Pilipinas, National Economic and Development Authority, and the Office of the President.
Diokno noted that imports growth target for the year was raised to nine percent from the previous seven percent.
The latest 2018 imports growth was ramped up to the same level as the 2019 to 2022 target.
The reference exchange rate for 2018 was also changed to a range of P49 to P52 per $1 from P48 to P50.
“This adjustment, however, should not be a cause of concern because a peso depreciation is actually favorable to our fiscal position,” he said.
To date, the local currency is trading at near the P50 to $1 level. It finished this week’s trading at 50.14 per dollar.
Last December, economic managers revised the peso rate for 2017 to 2018 from between 45 and 48 per dollar to between 40 and 50 due to the expected impact of interest rate normalization in the US.
Also revised was the 2018 crude oil price assumption of from $50 to $65 per barrel from the previous $45 to $60 per barrel which is the assumption range for 2019 to 2022.
The LIBOR (London InterBank Offered Rate) reference rate, which is the benchmark for foreign borrowings, for 2019 to 2022 was adjusted to two to three percent from 1.5 to 2.5 percent, which is the original assumption from 2018 to 2022.
A Department of Finance (DOF) projection, meanwhile, points to another deceleration in the price momentum of commodities for last December as macroeconomic fundamentals continue to remain strong.
In its economic bulletin, the DOF forecasts the December 2017 inflation at 3.2 percent, which is slower than the 3.3 percent price rise in the previous month “on the back of more stable food prices and lower power costs.”
It explained that “low inflation is an indication that the country’s macroeconomic fundamentals remain strong.”
“Solid fundamentals backed by TRAIN (Tax Reform for Acceleration and Inclusion) 1’s implementation, rice sector reform and the build, build, build policy will push the country’s growth to seven to eight percent this year and sustain a manageable inflation rate,” it said.
As of the end of November last year, inflation averaged at 3.2 percent, within the government’s two to four percent target for 2017 to 2019.
Last November, inflation went down to 3.3 percent after peaking for the year at 3.5 percent last October.
The DOF sees the inflation rate on food and non-alcoholic beverages and of rice to remain flat at 3.2 percent and one percent, respectively, last December from the previous month’s level.
However, an uptick is seen for the alcoholic beverages and tobacco to 6.2 percent from month-ago’s 6.1 percent.
Inflation of non-food items is generally projected to slow down to 2.8 percent in the last month of 2017 from 3.3 percent last November.
Citing Department of Energy (DOE) and Manila Electric Company (Meralco) data, DOF said rate per kilowatt hour for 200 kilowatt per month consumption last December went down to P9.25 from last November’s P9.63.
Meralco’s generation charge per kilowatt hour also went down to P4.60 from month-ago’s P4.91.
Price of gasoline in the National Capital Region (NCR) in the last month of last year declined to P48.12 per liter from P48.48 a month ago.
The price of diesel, meanwhile, rose to P36.20 from P35.46 per liter last November.