Economic team sets ‘catch-up’ plan to meet growth target

The Economic Development Cluster (EDC) on Friday agreed on a "catch-up" strategy to achieve the 6-7% growth target this year as the economy was dragged to a four-year low due to lower government spending resulting from the four-month delay in the passage of the 2019 national budget.

“A catch-up plan is imperative. The EDC estimates that the government under spent by close to P100 billion during the first five months of the year due to the delayed passage of the 2019 budget. That is around P750 million to P1 billion a day,” Socioeconomic Planning Secretary Ernesto Pernia said.

“To reach our full-year growth target of 6 to 7 percent, the economy will need to expand by an average of 6.1 percent over the next three quarters. This target is still within reach, should the private sector sustain its current performance and government be able to speed up the implementation of its ongoing programs and projects, and jump start new ones,” Pernia added.

Infrastructure

For his part, Finance Secretary Carlos Dominguez III said spending commitment of the two main infrastructure agencies —the Department of Public Works and Highways and the Department of Transportation —with an estimated combined amount of 803.1 billion pesos, is enough to cover the national government’s infrastructure target.

Infrastructure disbursements from other agencies such as the Department of National Defense (DND), Department of Education (DepEd), and the Department of Health (DOH) can further drive spending growth if they are able to accelerate implementation of their capital outlay programs and projects, according to Dominguez.

The said programs include the Armed Forces of the Philippines (AFP) Modernization Program of the DND, the school-building program of the DepEd, and the Health Facilities Enhancement Program of the DOH, the Finance chief said.

"DPWH and DOTr remain optimistic that they can deliver on their respective commitments by accelerating infrastructure disbursements and implementation of projects. To enable them to attain their targets, it would require close cooperation and support of other government agencies by expediting the approval of permits and other requirements," Dominguez said.

"Hopefully, no major weather disturbance will disrupt the implementation of the projects," the Finance chief said.

Socioeconomic programs

During its meeting, the EDC also agreed that the government will fast track  the implementation of its priority socioeconomic programs, such as the National ID System, 4Ps, social pension, unconditional cash transfers, and fuel marking program.

But aside from the infrastructure and social protection programs, the government also has to double its efforts in the agriculture sector, which should expand by at least 2% per year.

The Department of Budget and Management (DBM) said actual government disbursement amounted to P778 billion in the first quarter of 2019.

In order to hit the full year disbursement program of P3.774 trillion, government must spend P2.996 trillion for the second to fourth quarters of the year, Pernia said.

Actual infrastructure disbursements amounted to P207.2 billion in the first quarter.

To reach the infrastructure-spending target of P1 trillion, government must disburse P792.97 billion for infrastructure from the second to fourth quarters.

Agriculture

Agriculture Secretary Emmanuel Piñol said the Department of Agriculture is working on measures to improve the performance of agriculture this year.

He pointed out the need to maximize productivity through coconut-based inter-cropping schemes and to build more processing facilities in villages to address low prices of copra.

Among the proposed solutions was also a fund allocation to complete a 12,000-kilometer farm-to-market-road network nationwide to help bring down the cost of basic food commodities.

“Besides feeding people, another importance of agriculture is that it is a feeder sector to industry, for food manufacturing in particular, which is the biggest subsector under manufacturing. So if the agriculture sector underperforms, manufacturing is also affected,” Pernia said.

Power

In the power sector, government is keen on mitigating the effects of El Niño by ensuring power plants have minimal forced outages, managing maintenance schedules, as well as proposing a hydro management mechanism of existing hydroelectric power plants.

All these considered, DBM will continue to monitor disbursement performance of agencies considering the cash-based budgeting scheme under the 2019 General Appropriations Act.

Exports

Meanwhile, according to the Export Development Council, merchandise exports, which have been on a downtrend lately, are expected to grow by 6.1 percent this year—4 percent for goods, and 9 percent for services.

Major exports that showed decline in the first quarter were agriculture, manufacturing, electronics, coconut, processed fruits, tuna, shrimps, sugar, wood manufactures, and chemicals.

The decline was largely due to weakening global growth, market access (e.g., increased non-tariff measures of some trading partners), logistics and infrastructure issues (e.g., port congestion and traffic), and policy issues.

“As regards policy, we are urging Congress to pass critical reforms such as the amendments to the Public Service Act, the Foreign Investment Act, and the Retail Trade Act to encourage investments in industry and services, and boost private construction. That would have a significant contribution to the economy. The Economic Development Cluster is also endorsing the Philippine Export Development Plan 2018-2022 for the President’s signature,” Pernia said.

“This is a whole-of-society effort, thus we are equally counting on the private sector to strenuously drive economic growth. The Ease of Doing Business (EODB) law can be a major driving force, so we need to speed up enforcing the law for the private sector to more actively participate in our catch-up plan,” he added. —LDF, GMA News