The Aquino administration is hard at work to achieve its “aspired” economic growth target of as much as 8 percent, with economic managers confident that the Philippines can retain its rank as Asia’s fastest-growing market.
Finance Secretary Cesar Purisima said the main goal for state economic managers was to bring up the country’s average growth trend to ensure that the economy would continue to expand in the long term.
“Our aspirational growth target is 7-8 percent,” said Purisima, who heads the Aquino cabinet’s economic cluster.
The Philippine economy grew 7.8 percent in the first quarter, higher than the top end of the official target of 6-7 percent for the year. The country outpaced even China’s economy, the region’s perennial growth driver, which expanded 7.7 percent in the same period.
Since the start of the Aquino administration, Purisima said the country’s gross domestic product (GDP) was growing an average 6.1 percent. This was higher than the 4.7-percent average growth recorded in the previous 10 years (which was marred by the global economic crunch triggered by the subprime crisis in the United States).
The government’s goal was to increase the average growth trend to between 5.5 and 6.5 percent. To achieve this, Purisima said the government was making sure that “constraints to growth” would be addressed.
Chief of these constraints was the country’s fiscal situation, which limited the government’s capability to spend on key projects. He said the Department of Finance has worked hard to improve tax collections by plugging holes in the country’s revenue base and running after tax evaders.
He noted that the improvement of the country’s fiscal position in the past three years has given the government more resources to spend on much-needed projects in the areas of infrastructure and social welfare.
Purisima said this would help the government address the country’s second-biggest constraint to growth: low infrastructure spending.
Next year, the government plans to increase the share of infrastructure spending in the national budget to 20 percent, up from 16 percent this year. By 2016, Purisima said the share should increase to 25 percent.
The Department of Budget and Management is set to propose a P2.27-trillion national budget for 2014, up from P2 trillion this year. Next year’s budget will be equivalent to 17 percent of the country’s GDP, up from 16.8 percent this year.
Raising the country’s budget for infrastructure is in line with the IMF’s prescription of spending the equivalent of 5 percent of GDP on new roads, bridges, airports and the like. The government wants to achieve this level of infrastructure spending by 2016. This year infrastructure spending is forecast to reach the equivalent of 2.6 percent of GDP.—Paolo G. Montecillo