By Beting Laygo Dolor
As expected, the extended delay in the signing of the 2019 budget resulted in negative
repercussions for the Philippine economy.
The country’s gross domestic product (GDP) – the sum total of the goods and services produced by a country for a certain period minus earnings from overseas-based workers – slowed down to 5.6 percent in the first quarter of 2019 compared to the 6.5 percent growth for the same period in 2018. This, according to data released last week by the Philippine Statistics Authority (PSA). The latest quarterly GDP was the lowest since the first quarter of 2015, when the country’s growth was pegged at 5.1 percent.
National Economic and Development Authority (NEDA) Director Gen. Ernesto Pernia said the slower growth of the country’s output was caused by the delay in the passage of the 2019 budget.
According to Pernia, “As we have forewarned repeatedly, the re-enacted budget would sharply slow the pace of our economic growth.”
Intramurals between the Senate, on one hand, and the House of Representatives, on the other, brought about by what the former says were illegal “insertions” in the proposed national budget by the latter delayed the budget by more than a full quarter, during which time the national government was spending based on the previous year’s budget.
Pernia added that the Philippine economy “could have grown by as much as 6.6 percent, if we were operating under the 2019 fiscal program.”
All is not lost, however. The NEDA head said the country could still attain its targeted GDP
growth for the year of between six percent and seven percent if the economy grows by an
average of 6.1 percent over the next three quarters of the year.
The target could still be attained “given the current performance of the private sector.” This
must be backed by the government’s jump starting and speeding up its new programs, Pernia added.
For the first two months of 2019 alone, the government was not able to release PHP43.7 billion for its priority projects. The Department of Finance also blamed the budget impasse for the delay in the release of funds. Then, by law, funds for public works projects could not be released in the run up to the May elections, further upsetting the government’s timetable.
Based on all surveys, after this week’s mid-term elections, the Duterte administration can
expect to have a Senate as well as a House that is attuned to the President’s programs, notably his massive Build Build infrastructure program, which is expected to create tens of thousands of new jobs.
The national budget was finally signed into law by President Duterte last month after removing the insertions that the Senate said was perpetrated by allies of Speaker Gloria Macapagal Arroyo. The president vetoed the insertions, which he agreed was not only illegal but unconstitutional.
No sanctions were expected against the Speaker, as her term ends this year and she is banned from seeking another House seat by law.
The country’s Gross National Product (GNP) – its GDP plus earnings of overseas based Filipinos – is expected to remain stable since there is no expected decrease in the remittances of the millions of Filipinos working abroad, whether in land-based jobs or at sea.
The Philippines’ GNP actually posted a slight increase in the first quarter of 2019 compared to the same period last year, partially offsetting the drop in GDP.
The United Nations agrees with the government’s expectations of continued growth for the
economy this year. The UN’s Economic and Social Commission for Asia and the Pacific sees the Philippines growing at a healthy 6.5 percent clip for 2019.