DOF bullish of Q4 2019 growth

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    Finance Secretary Carlos Dominguez III said the government’s “catch-up spending plan” has enabled the country to recover from an early-2019 slump and would have closed the year with a better performance by the fourth quarter.

    This spending plan, crafted by the interagency Economic Development Cluster (EDC) of the Cabinet, “enabled the economy to recover in the third quarter, with a 6.2 percent growth rate, after an anemic performance in the first semester,” noted Dominguez.

    With that as a jumping point, Dominguez said the economy is “ready to soar” with the fourth quarter expected to fare even better in the fourth quarter as the government’s main infrastructure agencies deliver on their spending commitments for the remaining October to December 2019 period under this catch-up spending strategy.

    The EDC unveiled this catch-up plan in May after first quarter GDP growth settled at 5.6 percent, below the government’s 6 to 7 percent target for 2019.

    “This below-target economic expansion was the result of the government not being able to invest about P1 billion a day owing to the delayed approval of the P3.7 trillion 2019 national budget, which was exacerbated by the 2019 election ban. The effects of the budget delay lingered until the second quarter, when growth was recorded at a slightly lower 5.5 percent,” Dominguez said.

    Congressional action on the 2019 General Appropriations Bill (GAB) stretched to March 2019 with the President being able to sign the budget law only in April. The delay in the passage of the 2019 GAB forced the government to operate on a reenacted budget for four-and-a-half months, which meant it held off in those months the implementation of all new and some ongoing projects under Duterte’s accelerated spending agenda.

    Under the catch-up spending plan, the government’s goal is to spend P2.996 trillion starting the second quarter of 2019, of which P1 trillion is for infrastructure, to reach its programmed spending of P3.774 trillion for the entire year or about 19.6 percent of GDP.

    Dominguez said in the EDC’s meeting in November last year, almost a hundred percent of the fiscal year 2019 budget allotment program of P3.66 trillion was already released to all implementing agencies of the national government, including infrastructure, education, health and defense, among others as of end-October.

    “The EDC expected then for such disbursements to further accelerate in the remaining two months of 2019 to support a higher GDP growth rate for the full year,” he said.

    Total actual disbursements from January to October this year amounted to P2.938 trillion, which represents 78 percent of the 2019 full-year disbursement program of P3.77 trillion.

    This is 5.1 percent higher than the actual disbursements for the same period in 2018, Dominguez said during the November 28 meeting.

    For infrastructure and other capital outlays, the total actual disbursements in the first 10 months of 2019 reached P628.5 billion. This is 73 percent of the 2019 full-year disbursement program of P859.5 billion but 5.5 percent lower than the actual disbursements for the same period in 2018.

    Dominguez said based on the updates from the main infrastructure agencies–the Departments of Public Works and Highways (DPWH) and of Transportation (DOTr)—the EDC is confident that the government can hit its spending target for this year.

    “The DPWH is optimistic that it can deliver on its P725 billion disbursement target for the full year 2019. For the first 10 months of 2019, it has so far disbursed 69 percent of its total commitment this year, totalling P503.4 billion. Secretary Mark Villar assured us that the remaining P221.6 billion target disbursements for the last two months of this year is attainable,” the EDC’s November 28 statement said.

    Between January and November in 2019, the DOTr’s actual disbursements reached P46.82 billion, 57 percent of its disbursement commitment for 2019. The DOTr expects to disburse an additional P30.85 billion in the last month of the year to fulfill 94 percent of its commitment of P82.39 billion for 2019.

    At the last Development Budget Coordination Committee (DBCC) meeting held for 2019, the economic managers announced that disbursements are targeted to hit P3.76 trillion in 2019, which is equivalent to 20 percent of GDP.

    From an initial 75 flagship projects, the government has expanded its list of “Build, Build, Build” projects to include additional strategic projects with national impact and those undertaken through Public-Private Partnerships (PPPs).

    The 100 flagship projects cover five categories, with transport and mobility projects as top priorities. The other four are power, water, information and communications technology and urban development and renewal.

    Included in the list are the Metro Manila Subway Project, North South Commuter Railway, Clark International Airport Expansion Project, Cebu Monorail System, Panay-Guimaras Negros Bridge, Samal Island-Davao City Connector Bridge, and the Mindanao Rail Project.