In a reversal from their initial stance earlier this month, economic managers are set to issue another recommendation to Malacañang next week, this time to proceed with the scheduled P2 per liter fuel excise tax hike. Should this proceed, the January-slated hike will be implemented only four months ahead of next year’s mid-term elections.
Expenditures outpaced revenue increases in October, causing the national government’s budget deficit to more than double in size. The fiscal gap surged by 175% to P59.9 billion in October from P21.8 billion a year ago. Experts expect that this deficit will continue to widen, in alignment with President Duterte’s plans for higher infrastructure spending.
Analysts at S&P Global Ratings hold that inflation has reached its peak this year, but will likely remain high through early 2019. As a result, any increases in household consumption will be dampened by elevated price hikes and higher interest rates. One credit rater suggests that the government could ease on state spending, in a bid to narrow the widening account deficit.
Meanwhile, Budget Secretary Benjamin Diokno says the economy won’t be seeing any boosts from state spending over the first half of next year, due to an expected delay in enactment of the proposed budget and the ban on public works ahead of May’s mid-term elections. Expect a five-month pause in the implementation of new projects, Secretary Diokno says.
Multilateral funding agencies (ADB, World Bank, IFAD) and foreign governments (China, Japan, Spain) have pledged P35.1 billion in assistance for the rehabilitation of war-torn Marawi City, covering almost half of the estimated P72.58 billion needed for the overall recovery program. The balance, Finance Secretary Carlos G. Dominguez III says, will be sourced locally.