By Luis Leoncio
Economic managers bared over the weekend a P3.767-trillion budget for next year, which is equivalent to 21.6 percent of the country’s gross domestic product (GDP) and represents a 12.4-percent increase from the P3.350-trillion allocation this year.
Spendings are projected to reach P5.661 trillion come 2022, equivalent to 22.3 percent of GDP, while the deficit-to-GDP ratio at 3 percent will be maintained from 2017 to 2022, the Development Budget Coordination Committee (DBCC) said after a meeting.
The DBCC is composed of the secretary of Budget and Management, as chairman; the director-general of the National Economic and Development Authority (Neda) as co-chairman; and the Executive Secretary, secretary of Finance and the Bangko Sentral ng Pilipinas (BSP) governor as members.
The infrastructure budget for 2018 was also pegged at P1.101 trillion, equivalent to 6.3 percent of GDP, DBCC data showed.
The allocation for infrastructure was higher than the P847.2 billion budget in 2017, which is equivalent to 5.3 percent of GDP.
Infrastructure spending will rise up to P1.840 trillion by 2022, reaching as high as 7.3 percent of GDP, DBCC figures showed.
The DBCC forecasts sustained economic growth in the Philippines as macroeconomic fundamentals including imports remain stable, while exports are expected to improve.
“Furthermore, the expansionary fiscal policy of the government is expected to boost the performance of the Philippine economy,” Budget Secretary Benjamin Diokno said.
Diokno added that the DBCC is also keeping growth targets for the medium term ,while the inflation assumptions remain stable at 2 percent to 4 percent until 2022.
The estimates were based on DOF projections that the higher excise taxes on petroleum, automobiles, and sugar-sweetened beverages will have minimal effect on prices.
“Furthermore, this inflation outlook remains within target as inflation forecasts of external institutions such as the International Monetary Fund, World Bank, and AP Consensus Forecasts belong within the said range,” Diokno said.
“We expect the GDP growth to remain unchanged at 6.5 percent to 7.5 percent in 2017 and seven to eight percent from 2018 to 2022,” he said.
The projected robust economy is expected to be driven by construction and infrastructure development, primarily fueled by the administration’s Build, Build, Build program, Diokno said.
He added the increase in government spending is seen to propel the economy upwards as the government plans to expand its investment in human capital.
DBCC figures also showed the government is maintaining Dubai crude oil price assumptions for 2017 at the $40 to $55 per barrel level and $45 to $60 per barrel in 2018. Oil prices are expected to rise to $50 to $65 per barrel from 2019 to 2022.