Senate body keen on GDP catch-up plan
By Charmaine A. Tadalan
Reporter
THE SENATE Finance committee will zero in on the government’s spending catch-up and impact of the escalating Sino-US trade war as the chamber begins on Wednesday its parallel hearings on the proposed P4.1-trillion national budget for 2020.
Scheduled in the committee starting Wednesday is a two-day briefing with the Development Budget Coordination Committee (DBCC) that will focus on macroeconomic conditions.
Asked what he expects of the DBCC briefing, Senator Juan Edgardo M. Angara, committee chairman, replied in a mobile phone message on Sunday: “mention of how to catch up to predicted growth rate to make up for delayed budget and to prepare for effects of us China trade war.”
Gross domestic product (GDP) expanded by a disappointing 5.5% last semester against an already reduced 6-7% full-year target, blamed largely on the four-and-a-half month delay of the 2019 national budget. Socioeconomic Planning Secretary Ernesto M. Pernia said on Aug. 9 after release of the second-quarter and first-half GDP data that the economy will have to grow by 6.4% this semester to reach the lower end of the government’s full-year target.
The DBCC is composed of the Department of Budget and Management (DBM), National Economic and Development Authority, Department of Finance and the Bangko Sentral ng Pilipinas.
President Rodrigo R. Duterte signed the 2019 national budget on April 15 — four-and-a-half months late after a tiff between the Senate and the House of Representatives over alleged irregular fund insertions — but vetoed P95.3 billion in funds deemed not in sync with government priorities, reducing it to P3.662 trillion.
The DBCC in a March 13 meeting slashed its GDP growth target for 2019 to 6-7% from 7-8% originally in the face of the delayed 2019 national budget.
State spending catch-up was under way as of July, according to data the DBM released on Aug. 15, as state offices moved to make up for subdued expenditures for much of last semester due to the four-month delay in enactment of this year’s national budget.The DBM said then that while notice of cash allocation (NCA) — the authority the department gives to state offices to use cash allocated to them — dropped by 17% to P1.688 trillion as of July from P2.033 trillion in last year’s first seven months, and NCA used dipped 1.57% to P1.569 trillion from P1.594 trillion, NCA utilization actually improved to 93% from 78% in the same comparative periods.
The Treasury reported on Thursday last week that state spending picked up by 3.43% to P339.4 billion in July from P328.1 billion a year ago, although primary expenditures — or net of interest payments — edged up by just 1.81% to P288.4 billion from P283.3 billion. Still, that was a turnaround from a 3.06% drop in primary expenditures, which include infrastructure disbursements, in June.
The seven months to July still saw the government spending 0.11% less at P1.93 trillion from P1.932 trillion a year ago, with primary spending still contracting by 1.32% to P1.699 trillion from P1.721 trillion.
The House of Representatives, which began national budget deliberations on August 22, targets final approval of the national budget by Oct. 4. It targets to submit the approved spending plan to the Senate on Oct. 8 and have the bicameral conference committee report on Dec. 9 in time for the signing into law by Dec. 20.
The proposed spending plan for next year is 12% more than the P3.662-trillion 2019 budget and is 19.4% of GDP, with planned infrastructure expenditure topping spending priorities at P972.5 billion, equivalent to 4.6% of GDP.
Credit raters and economists have said that while the Philippines is not immune to a downturn in global trade as a result of the escalating Sino-US trade ware, they are watching more closely how the government plans to make up this semester for muted spending that marked the first half.
