Pass budget ASAP, Congress pushed

The government’s downgraded growth goal for 2019 given a reenacted budget was “too aggressive” but was needed to push Congress to approve the 2019 appropriations bill as soon as possible, London-based Capital Economics said.

“Economic growth in the Philippines is likely to slow unless the 2019 budget is approved soon, but the cuts the government has announced to its GDP (gross domestic product) growth forecast for this year look too severe,” Capital Economics senior Asia economist Gareth Leather and Asia economist Alex Holmes said in a March 15 report titled “Philippines budget deadlock, Indonesia election.”

Last week, the Cabinet-level Development Budget Coordination Committee slashed its 2019 GDP growth target range to 6-7 percent from 7-8 percent previously.

The state planning agency National Economic and Development Authority had also estimated GDP growth to fall to 4.2-4.9 percent—the slowest in eight years—if the government operates on a reenacted budget for the entire year.

But for Capital Economics, “the cuts are much too aggressive.”

“We think the growth targets have been revised partly for political purposes and are intended to persuade lawmakers to approve the budget. It also gives the administration an excuse to back away from its 7-8 percent growth target, which always looked too optimistic given the worsening external environment,” it said.