THE GOVERNMENT is positive that the Philippines will achieve upper-middle-income status by the fourth quarter of next year, according to the National Economic and Development Authority (NEDA).
“Yes, next year positive,” NEDA Secretary Ernesto M. Pernia said in a text message to BusinessWorld when asked if NEDA believes the Philippines will achieve the milestone next year.
Asked what quarter of 2020, Mr. Pernia replied, “last quarter.”
The World Bank norm for an upper-middle-income economy is a per capita income ranging between $3,896 and $12,055.
The NEDA earlier projected the milestone to be reached this year but moved it back after gross domestic product (GDP) growth slowed to 5.6% in the first quarter due to the delay in passage of the 2019 General Appropriations Act (GAA).
The government intends to spend P2.996 trillion from the second to the fourth quarters of this year, to catch up with its targeted growth rate of 6-7%.
The Department of Finance (DoF), meanwhile, said it also has a positive outlook for the economy due to its confidence in upcoming reforms.
In a separate text message, Finance Assistant Secretary Antonio Joselito G. Lambino II said, “We are certainly one with NEDA and Sec. Pernia in working toward graduating to upper-middle-income status at the soonest possible time, while at the same time helping one million Filipinos lift themselves from poverty every year.”
“The following will help achieve this: continue investing in infrastructure; pass the remaining packages of the comprehensive tax reform program; improve the investment climate by passing priority legislation; fully implement socioeconomic reforms such as the national ID, ease of doing business, rice liberalization, universal health care; and improve agricultural productivity,” Mr. Lambino added.
Last month, the World Bank approved a $300 million loan for additional funding of the Philippines’ conditional cash transfer program for two years.
The Philippines has an annual budget of $1.7 billion for the CCT known as Pantawid Pamilyang Pilipino Program (4Ps), which benefits 4.2 million families including 8.7 million children.
The additional funding from the World Bank is meant to cover 9% of the 4Ps budget until June 2022.
In an e-mail to BusinessWorld, Mara K. Warwick, World Bank Country Director for Brunei, Malaysia, the Philippines and Thailand, said, “Investing on solid and impactful social safety nets is a norm for upper middle-income economies to make sure that no one is left behind while at the same time continuing to invest in the human capital of future generations. Social protection programs help to move people out of poverty, improve human capital, which contributes to economic growth. This helps the country achieve higher income status.”
The 4Ps are active in 145 cities and 1,483 municipalities, and has been credited with a quarter of the poverty reduction in the Philippines, according to the World Bank 2018 Poverty Assessment.
Asked how the additional funding from the World Bank can help the country achieve upper-middle-income status, NEDA Undersecretary Adoracion M. Navarro said in an e-mail, “This World Bank loan is part of the government’s external financing program for 2020-2022. It is more directly relevant to our goal of reaching for the demographic dividend and raising the country’s human development index, than increasing income. The program loan will help the government in expanding poor children’s access to health and education services through the 4Ps.”
“It will also help in systems improvements in the implementation of the 4Ps. Overall, it is expected to translate to higher human development condition in the country’s poor areas; it will help regions which are lagging in terms of human development indicators to catch up. There is no indicative regional breakdown of the program implementation yet, but I understand that in the past 4Ps implementation, BARRM (Bangsamoro Autonomous Administrative Region) had the highest number of beneficiaries among regions,” Ms. Navarro added.
In May, Ms. Navarro said in a briefing that the regional disparities or inequality in per capita income has widened over time, noting the need for the government to improve transportation and connectivity especially in rural areas to reduce gaps.
“As widening disparities may be more a result of high rate of population growth in some regions than poor economic performance per se, stakeholders especially local government units must also support the government’s planning and reproductive health program,” Ms. Navarro said.
“We have to integrate small farmers and fisherfolk into larger business enterprises. This is apart from other strategies like farm diversification which will help farmers venture into commodities with higher value and market potential,” she said. — Reicelene Joy N. Ignacio