The economic managers are hoping legislature will pass the budget on time so the country will not suffer from the adverse effects of a reenacted budget.
“We encourage the legislature to pass the budget on time after due deliberations, as the consequences of operating on a reenacted budget as what happened this year are extremely detrimental to the nation, especially the disadvantaged,” Carlos Dominguez, secretary of the Department of Finance (DOF), told reporters yesterday.
The DOF said the delay in the passage by Congress of the 2019 budget weakened expenditures and the domestic economy.
“National government underspending was estimated at around P178 billion (in the first half of the year). This is about two percent of first semester nominal GDP (gross domestic product),” the DOF said in its economic bulletin.
“A catch-up program has been adopted by the implementing agencies. This will boost growth performance for the second semester,” the agency added.
Wendel Avisado, Department of Budget and Management acting secretary, said what happened in Congress “was a purely legislative matter.”
Earlier, Deputy Speaker Luis Raymund Villafuerte moved to have the referral of the General Appropriations Bill to the appropriations committee withdrawn.
“We will not comment on it. We are confident that Congress will pass the proposed 2020 national budget in due time,” Avisado said.
Sought for comment, Ernesto Pernia, socioeconomic planning secretary, said “that’s risky.”
“(Foremost) objective is budget must be passed on time. A repeat of 2019 will be a disaster once again,” Pernia said.
At last month’s Development Budget Coordination Committee briefing at the Lower House, Pernia said the economy could grow below 5 percent in 2020 if the proposed budget for next year is not approved into law and a reenacted budget is implemented instead.
If such happens, the Philippines will likely post the slowest growth rate since the 3.7 percent GDP recorded in 2011, and the first time since 2012 that it will fall below 6 percent. This does not take into account the growth of the Philippine economy for this year.
“We will have regressing economic growth performance, probably below 5 percent or something on that border,” Pernia said.
In the first half of 2019, the economy posted a lower-than-expected growth of 5.5 percent, amid the continuing effect of the delayed passage of the 2019 budget coupled with the election ban.
The economy will have to grow by an average of at least 6.4 percent in the second half to reach the low-end of the full-year growth target of 6 to 7 percent.
“Our growth regressed. We could have achieved 6.5 percent. But we only did 5.5 percent. That’s a full one percentage point regression in the economic growth,” Pernia said.
Meanwhile, the DOF in its press statement said expenditures declined by 0.8 percent in the first semester of 2019, the first drop experienced during the first semester since 2011.
“This is a significant reversal from the 20.5 percent rise in the same semester of 2018. This is due to the four and a half month delay in the approval of the General Appropriations Act by Congress,” the DOF said.
Expenditure effort declined to 18 percent, lower than the 19.42 percent recorded in the first semester of 2018 due to the reenacted budget.
National government (NG) revenues, on the other hand, rose 9.7 percent in the first semester of 2019.
Tax revenues grew 10.1 percent, with Bureau of Internal Revenue collections rising 10.6 percent and Bureau of Customs collections up 8.5 percent.
The DOF said this is due to the second phase of the Tax Reform for Acceleration and Inclusion Law and continued tax administration reforms.
Non-tax revenues rose 6.9 percent due to higher collection of dividend remittances on NG shares of stocks, guarantee fees and share in the profits of the Philippine Amusement and Gaming Corp.
Revenue effort rose by 0.44 percentage point to 17.52 percent in the first semester of 2019 compared to 17.08 percent in the same semester of last year. Tax effort also rose by 0.43 percentage point, from 15.2 percent to 15.63 percent, the DOF said.
“The moderated growth in expenditures led to a lower NG deficit, which settled at 0.48 percent of GDP,” the DOF said.