National Economic and Development Authority (NEDA) chief and Planning Secretary Arsenio Balisacan yesterday expressed confidence the country will be able to achieve the lower end of the growth target of 6 to 7 percent for the year as government agencies catch up on their budget spending in the second half and sustain efforts to address inflation.
But Balisacan also cited some headwinds that include the possible P5 fare hike and the lifting of reduced tariffs on some commodities which he said could impact on inflation and drag growth.
Balisacan, in a briefing in Malacanang, said the low absorptive capacity of government agencies has led to slowdown in growth in the second quarter with the gross domestic product at 4.3 percent.
But he said action and catch up plans have been submitted and are now being implemented.
“We can speed-up the implementation of projects and programs to benefit the economy for the second half of the year. The things that were not spent in the first half could be spent in the second half and (they) will get recorded as part of the economic activities during the second half. By addressing the issues that we have identified… we could still achieve, at least, the lower end of the range of six to seven,” he said.
He said the country needs to grow by 6.6 percent in the second half to achieve six percent growth for the full year.
Balisacan said the government also needs to continue to tame inflation and attract more investments to produce more quality jobs for Filipinos.
“(We are making) progress in slowing down inflation. Inflation has always been a major concern because when… high inflation, persists, that discourages or depresses domestic demand,” he said.
Balisacan said since January, inflation has started to slow down which the government wants to continue.
“If we succeed in that, that will be a big boost to our domestic demand and to our growth,” Balisacan said.
He acknowledged that rising prices of oil and rice affect inflation.
To further boost the country’s economic development, Balisacan said the Marcos administration is resolute in implementing high-impact infrastructure projects which are expected to boost connectivity, facilitate investment, and generate more jobs.
He said at present, the government is implementing 71 Infrastructure Flagship Projects (IFPs) worth P4.11 trillion, up from the 68 projects in the first quarter.
The three projects that started construction are Metro Cebu Expressway, the Nautical Highway Network Improvement, and the Daang Maharlika Improvement projects.
Balisacan said 123 IFPs have yet to start of which 27 have secured approval for immediate implementation; eight are awaiting government approval; 52 are currently in the preparatory stages; and 36 are in the pre-project preparation phase as of July 2023.
New approvals
He said NEDA board, chaired by President Marcos Jr. yesterday approved three more infrastructure projects namely the Tarlac-Pangasinan-La Union Expressway Extension Project; the Philippine Rural Development Project Scale-up; and the Upgrade Expansion, Operation and Maintenance of the Laguindingan International Airport Project in Misamis Oriental.
“With their inclusion in the list, these projects will be prioritized in the government’s annual budget preparation and will benefit from the expedited issuance of applicable permits and licenses, in accordance with current legal frameworks,” he said.
Balisacan said the Board also approved the revised guidelines for the formulation, prioritization, and monitoring of the government’s IFPs.
This means projects approved by the Investment Coordination Committee and confirmed by the NEDA Board, which are not in the current IFP list but meet the criteria stated in the IFPs Guidelines, shall now be included in the IFP list, subject to the endorsement from the concerned
implementing agencies.
The NEDA Board also approved the request for a change in cost, scope, and implementation timeline of the Flood Risk Management Project for the Cagayan de Oro River, and the provision of six fire trucks for Marawi City — under the Bangon Marawi Rehabilitation and Recovery program, through P72.5 million official development assistance grant from China.
Fare hike
According to Balisacan, the impact on economic growth, on inflation, and on areas to be covered should be considered when deciding the latest petitions for a P5-increase in minimum fare.
The fare hike petitions were prompted by the series of oil price hikes and are pending with the Land Transportation Franchising Board.
“Any policy actions that we make, especially those affecting a big part of the economy, would have to take into account the broader picture or particularly the broader objective of ensuring that we will keep the momentum of growth going. We’ll continue the progress that we have made in recent months in slowing down inflation,” Balisacan said.
He added NEDA needs information on which areas will be covered by the increase, whether it will be applied nationwide or in select regions or if the hike applies only to jeepneys or will include other public transportation such as motorcycles and buses.
The Pasang Masda, Altodap, and ACTO asked for a P5 fare hike for the first four kilometers and an additional P1 for the succeeding kilometer.
If approved, the minimum fare will increase from P12 to P17.
Not the right time
Balisacan meanwhile said government has to review the circumstances whether or not the low tariffs granted to key commodities such as meat of swine (fresh, chilled or frozen), maize (corn), rice and coal should be extended beyond December 2023.
But for Balisacan, now is not the right time to lift the lower tariffs.
“Given the situation now, as we actually see it, the world prices of rice have been rising. With the lagged effects of those floods and the typhoons that hit us, we have to be careful about reversing the gains. But again, that depends, it’s only August and the expiration of the current arrangement is December of this year,” Balisacan said.
The President previously approved the extension of Executive Order (EO) 171 on reduced import duty rates through EO 10, which was issued on Dec.29, 2022.
EO 171 reduced the Most Favored Nation (MFN) tariff rates for key commodities such as meat of swine (fresh, chilled or frozen), maize (corn), rice and coal until Dec. 31, 2022.
The enactment of EO 10 extends the reduced MFN tariff rates of meat of swine (fresh, chilled, or frozen), maize (corn) and rice until Dec. 31, 2023, and coal beyond 2023, provided that there will be a semestral review of the reduced tariff rates after the aforementioned period.
The initial decision to extend the validity of the reduced MFN tariff rates aims to protect consumers by keeping prices affordable to ensure food security, augmenting the local supply of basic agricultural commodities, reducing the cost of electricity and diversifying the country’s market sources. – With ANGELA CELIS
