BUDGET SECRETARY Amenah F. Pangandaman attends the meeting of the Development Budget Coordination Committee, Feb. 5, 2024. -- DEPARTMENT OF BUDGET AND MANAGEMENT

By Luisa Maria Jacinta C. Jocson, Reporter

THE Development Budget Coordination Committee (DBCC) is reviewing current data to see if there is a need to revise revenue and disbursement assumptions, according to the Budget chief.

“The principals requested the Technical Working Group/Executive Technical Board to study the numbers (actual and emerging) so we can decide if there will be revisions moving forward,” Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman said in a Viber message.

She said this still needs to be “firmed up” as there are still data yet to be released, such as the quarterly disbursement program and revenue estimates from the Finance department.

The DBCC held a special meeting on Monday to discuss medium-term fiscal framework targets, investment and financing strategies and the overall growth outlook of the country.

It was also the first DBCC meeting attended by Finance Secretary Ralph G. Recto and Special Assistant to the President for Investment and Economic Affairs Frederick D. Go. The DBCC is set to have its next meeting in March.

Ms. Pangandaman also said the economic team is working on its fiscal consolidation strategy.

“There will be a consolidation strategy — specifics to follow — but we will ensure that our spending-to-gross domestic product (GDP) ratio will remain above 20% until 2028. We will also ensure that infrastructure spending is between 5% and 6% of GDP over the medium term since this has a higher multiplier effect on GDP growth,” she said.

Based on the latest DBCC data, the government expects deficit-to-GDP ratio to settle at 5.1% this year. Revenues are expected to reach P4.2 trillion or 15.5% of GDP, while disbursements are seen to hit P5.6 trillion or 20.6% of GDP.

In a separate statement, the National Economic and Development Authority (NEDA) said it is “committed to achieving the government’s growth targets this year by incorporating the lessons learned in 2023 in the ways forward this 2024.”

The DBCC is targeting GDP to grow by 6.5-7.5% this year and 6.5-8% from 2025 to 2028.

The economy grew by 5.6% in 2023, missing the government’s 6-7% growth goal. It was also much slower than the 7.6% expansion in 2022.

To achieve its growth targets, the NEDA said that it will be crucial to build a strong fiscal foundation, expand the economic pie, ensure food security, improve access to education, build sustainable settlements and communities and ensure a more responsive and accessible government.

Meanwhile, GlobalSource Partners country analyst Diwa C. Guinigundo said that the government should ensure its fiscal consolidation plan does not come at the cost of growth.

“It is not good for the government to justify the failure of public spending to measure up to the demands of a growing economy by way of providing higher levels of infrastructure, quality education and public health,” he said in a report dated Feb. 5.

“It’s about time good governance produces fiscal and debt sustainability without sacrificing economic prosperity.”

In the fourth quarter, government spending contracted by 1.8%. This was a reversal of the 6.7% growth in the previous quarter and 3.3% a year ago.

Full-year government spending posted flat growth of 0.4%.

Mr. Guinigundo noted that last year was not the first time state spending slowed down.

“Growth of public spending in 2018 and 2019, before the pandemic, was high at 13.4% and 9.1%, respectively. The pandemic year of 2020 even saw public spending climb by 10.5%. In the next three years, it further weakened to 7.2%, 4.9% and last year, to a measly 0.4%,” he said.

NEDA Secretary Arsenio M. Balisacan earlier said this decline in spending was due to the government’s fiscal consolidation strategy.

Mr. Guinigundo said that the government must ensure the budget is used judiciously and is channeled towards “growth-raising public spending.”

He also called for the immediate passage of pending tax measures to boost revenues. If there will be a need to resort to borrowing, he said that the government should “ensure the best terms” and minimize foreign currency risks.

“An even greater challenge is how to deliver on higher, albeit more ambitious targets of 6.5-7.5% for this year and 6.5-8% until the end of the Marcos administration now that global risks seem to have mushroomed and domestic downside risks continue to be dominant,” Mr. Guinigundo said.