The national government’s higher-than-programmed deficit in 2019 is not seen to adversely affect the country’s credit rating, the Department of Finance (DOF) said in a statement yesterday.
Last year’s deficit stood at P660.2 billion, exceeding the P620 billion cap by 6.49 percent.
The national government’s budget deficit breached the ceiling for 2019 as catch-up spending efforts accelerated expenditures in the latter part of the year.
“The rise in the national government deficit beyond the government target should not adversely affect the country’s credit rating as fiscal stimulus was needed to shore up the country’s growth to a level closer to its 6.3 percent 10-year GDP (gross domestic product) growth average,” the DOF said in its latest economic bulletin.
“Likewise, in 2019, the deficit was financeable because domestic interest rates and the national government’s debt ratios were declining,” it said.
To recall, the government’s spending plan was hampered by the delayed passage of the 2019 budget, coupled with the implementation of the election ban.
Because of this, the government failed to spend around a billion a day during the first few months of the year, the DOF said previously.
The government had to implement a catch-up expenditure plan to accelerate state spending on infrastructure and human capital development projects, which in turn supported growth in the latter part of the year.
“The catch-up expenditure plan launched by government after the election ban has boosted expenditures by 27.4 percent in the fourth quarter, thus pushing the whole year national government expenditure program beyond the whole year program,” the DOF said.
“Despite this development, public construction declined by 2.4 percent in constant terms, last year,” it added.
The average growth of the economy for the full-year however expanded at its slowest pace in eight years, as the government said the delayed passage of the budget early last year dragged growth to below the government’s full-year projection.
The economy slowed to 5.9 percent, slightly below the low-end of the six to 6.5 percent revised target of the government for the year.
For 2020, the government has an economic growth target of 6.5 to 7.5 percent.
“The early approval of the 2020 budget will enable the public sector to (implement projects) on time this year,” the DOF said.
“This will moderate the negative impact of the Taal eruption and the global uncertainties arising from the coronavirus outbreak,” it added.
