Gov’t lowers growth goal amid budget row

President Rodrigo Duterte’s economic advisers on Wednesday cut their growth target this year to 6-7 percent from 7-8 percent in expectation of the government operating on a reenacted 2018 budget as a result of a congressional deadlock over pork in the P3.8-trillion national spending bill for 2019.

After a meeting of the Cabinet-level Development Budget Coordination Committee, acting Budget Secretary Janet Abuel told a news conference that the gross domestic product (GDP) growth target ranges for 2019 and 2020 were adjusted while keeping the earlier medium-term goal of 7-8 percent growth for 2021-2022.

For 2020, the GDP growth range was downgraded to 6.5-7.5 percent.

Impact of reenacted budget

“The impact on economic growth of budget reenactment is estimated at minus 0.7-0.9 percentage points if the budget is reenacted until April 2019, minus 1.4-1.9 percentage points if until August 2019, and minus 2.1-2.8 percentage points under a full-year reenacted budget,” Abuel said.

Leaders of the Senate and the House of Representatives failed to break a stalemate over postratification realignments in the final version of the 2019 budget bill at a meeting in Malacañang called by President Duterte on Tuesday night.

Sen. Panfilo Lacson earlier said Speaker Gloria Macapagal-Arroyo funneled P95 billion in Department of Public Works and Highways and Department of Education funds to projects arbitrarily identified by her allies in the House.

Senate President Vicente Sotto III has refused to sign the final version of the budget with the realignments, saying they were  unconstitutional, while President Duterte has threatened to veto the budget if it is illegal.

House leaders maintained that the congressmen just itemized the changes they had introduced in the budget, and the meeting broke up without prospects of a resolution.

Malacañang said on Wednesday that it could cushion the effects of a reenacted budget, but appealed to the lawmakers to break the impasse and submit the new budget for Mr. Duterte’s signature.

“We call on the senators and representatives to break the stalemate and deliver to the Filipino people an appropriations law that can aid this government better their lives and help our country move forward,” presidential spokesperson Salvador Panelo said.

Public services

Panelo gave assurance that the government would continue delivering public services despite operating on a reenacted budget.

Lacson and Sotto said Executive Secretary Salvador Medialdea and Finance Secretary Carlos Dominguez III agreed with them that President Duterte could sign a supplemental budget to deal with financial matters affected by Congress’ failure to enact a new budget.

That may be the solution to the difficulties of 134 public school teachers from four regions who, according to their union, the Alliance of Concerned Teachers (ACT), have not been paid for two months because of the absence of a new budget.

Reports about unpaid teachers initially came from the Central Visayas and Caraga regions, but the list expanded on Wednesday to include Central Luzon and the Davao region.

No funds

The ACT said most of the unpaid teachers were regular government employees but, according to local offices of the Department of Education, the reenacted budget does not include funds to pay the salaries of teachers hired after May 31, 2018.

“This is just further testament to what we have been saying all this time—it is us ordinary citizens and workers who suffer the consequences of the insatiable greed of our legislators,” said Raymond Basilio, ACT secretary general.

“The impasse cannot continue,” Basilio said. “Nonpayment of salaries in two months is a grave violation of our right to be compensated accordingly for our services.”

Speaking on behalf of the economic team, Abuel urged Congress to submit the 2019 budget for President Duterte to sign so that the government could proceed with its development priorities—public infrastructure and social services.

“The longer the budget impasse lasts, the larger the adverse effects to the Philippine economy and [the] people,” Abuel said.

Socioeconomic Planning Secretary Ernesto Pernia said the team rolled back its target for this year “because it seems to be a foregone conclusion that the budget will be reenacted until April, which is the least harmful of the possible reenactments.”

El Niño effect

Besides  a reenacted budget, Pernia said he also expected the effects on agriculture of the “mild” dry spell caused by El Niño to slow economic growth.

Dominguez, head of the team, said the US-China trade war would also slow growth prospect.

“The international trade issue between our major trading partners is a source of concern,” Dominguez said. “We also know very well that any slowdown in growth in our trading partners will affect our growth possibilities.”

Asked about the impact of a reenacted budget, Dominguez replied: “The fact that we did not have the budget we presented meant we had P46 billion less to spend in the [first 90 days of 2019]. That’s half a billion pesos a day that we are not spending to create jobs, to improve infrastructure, for better health care, and better education.”

Dominguez lamented the failure to implement new infrastructure projects at the start of the year.

“The first quarter is the best period to do construction—we have dry weather, no typhoons. That delay in starting new projects will delay the infrastructure program,” Dominguez said.

“We’re concerned that this delay [in budget approval] is dragging on too long. There’s an issue in the House, and we hope these issues are resolved and the certified budget is presented to the President for his action,” he said. —With reports from Christine O. Avendaño, Marlon Ramos and Matthew Reysio-Cruz