Congress warned repeat of budget delay to stifle growth to below 5%

A repeat of the delay in passing the national budget for 2020 would have a disastrous impact on the economy and likely to stifle growth to below 5 percent, the country’s chief economist warned Congress on Thursday (Aug. 22).

The Duterte administration had submitted a P4.1-trillion proposed budget for 2020.

Socioeconomic Planning Secretary Ernesto M. Pernia told the House appropriations committee that again operating on a reenacted budget next year will be “regressing” and would handcuff gross domestic product (GDP) growth.

“Government spending and even private spending on fixed capital formation will be hampered,” Pernia said.

“We are hoping, we are praying that it’s not going to happen again,” Pernia added.

The 2019 national budget was signed by President Rodrigo Duterte nearly halfway through the year, in April, after its approval was delayed by a Congress bickering over kickbacks in pork barrel funds.

The government was forced to underspend on goods and services by as much as P1 billion a day by the reenacted 2018 budget at the start of 2019.

As a result, economic growth in the first half of 2019 was pulled down to 5.5 percent below thr 6 to 7 percent target.

The economy needed to grow by an average of 6.4 percent in the second half of 2019 to avoid missing the full-year mark entirely.

“We look forward to timely passage of the budget,” said Pernia, who heads the state planning agency National Economic and Development Authority (Neda)

Pernia also urged Congress to extend the 2019 budget’s validity—“if possible”—until the end of 2020 to exhaust its allocations.

Acting Budget Secretary Wendel E. Avisado told the committee that the budget validity extension required approval by Congress.

He said another option was for Duterte to issue an executive order (EO) that would make it possible to use allocations in the 2019 budget for payment for projects until the end of 2020.

Avisado said the proposed EO was already being reviewed by the Office of the President.

“On the extension of appropriation, it really—and we agree—requires congressional approval. Our proposed EO is only for the extension of payment,” Avisado said./TSB