DOF says PH has fiscal space for ‘Yolanda’ spending

The Department of Finance assures the public that the government has enough fiscal space to accommodate spending for relief and rehabilitation of calamity-stricken areas without sacrificing its budget deficit target.

Finance Secretary Cesar Purisima said the government’s budget deficit prior to the entry of Supertyphooon “Yolanda” was way below the official ceiling set for the year.

As such, he said, the government can pour a significant amount for relief and rehabilitation and still keep the budget gap within manageable levels.

“We have enough fiscal space and we will make sure it is used to help out [in relief and rehabilitation efforts],” Purisima told reporters on Thursday.

Over 2,000 people reportedly died because of Yolanda, which struck the eastern, central and western Visayan regions.

Based on preliminary estimates, the three most affected regions could contract by as much as 8 percent next year as a result of the devastation.

As a consequence, the damage in the said areas could drag growth of the overall Philippine economy by 0.5 to 1 percentage point.

Purisima said the government would take advantage of its relatively healthy fiscal situation to meet the needs of affected areas and to temper the impact of the calamity on economic growth.

The DOF earlier reported that the government incurred a budget deficit of P101.2 billion in the first three quarters of the year, lower by P43.3 billion than the ceiling set for the period.

For the full year, the government has set the deficit limit at P238 billion, or at 2 percent of the projected gross domestic product.

This means the government can post a deficit of as much as P136.8 billion in the fourth quarter and still stay within the fiscal target for the year.

The government expects the economy to grow by between 6 and 7 percent this year.

In the first semester, the Philippines grew by a faster-than-expected 7.6 percent to match that of China’s and to become one of the fastest-growing economies in Asia.

The National Economic and Development Authority has said the Philippines still has a chance of posting a growth rate of above 7 percent this year despite the latest calamity.

The Neda admitted, however, that more data were still being gathered and a final estimate of the impact of the calamity on GDP growth was still being determined.