ECONOMIC managers now expect the Philippine economy to grow 5 to 5.5 percent this year, slightly higher than its previously downgraded assumption of 4 to 5 percent.
In a joint statement on Tuesday after its meeting, the Cabinet-level Development Budget Coordination Committee (DBCC) said they expect the country’s economic performance to accelerate further in the last quarter of the year on the back of easing mobility restrictions amid the Covid-19 pandemic.
The DBCC also retained its growth targets for 2022 at 7 to 9 percent for 2022 and 6 to 7 percent by 2023 and 2024.
“With our strong economic performance in 2021, the DBCC is optimistic that the country’s GDP will return to its prepandemic level by 2022,” the DBCC said.
Meanwhile, the Asian Development Bank (ADB) has also raised its growth outlook for 2021 and 2022.
The inflation rate for this year is now also projected to reach 4.3 to 4.5 percent, higher than its previous outlook of 2 to 4 percent.
Price of Dubai crude oil per barrel for 2021 was also adjusted to US$68 to US$70 from US$50 to US$70, while the assumptions for 2022 to 2024 were revised upwards to US$60 to US$80 per barrel from US$50 to US$70.
“This is mainly due to the optimistic demand outlook for oil as the global economy gradually rebounds in the medium-term,” the DBCC said.
The peso-dollar exchange rate for this year is also expected to reach P49 to P50 from P48 to P53 previously.
Goods exports growth this year is also now projected to jump by 16 percent from 10 percent previously, while goods imports growth this year is seen to soar by 30 percent from 12 percent.
For 2022 to 2024, the projections for inflation, foreign trade, and foreign exchange rate were maintained given recent economic developments.
In terms of fiscal program, revenues are also expected to exceed the P2.88-trillion target and reach P3.027 trillion due to increased economic activity and improved services of our revenue agencies arising from their digitalization projects.
Given the strong revenue collection performance, economic managers see revenues returning to prepandemic levels at P3.304 trillion in 2022, P3.624 trillion in 2023,and P4.049 trillion in 2024.
On the other hand, state disbursements or expenditures for this year are expected to settle at P4.633 trillion, lower than the P4.737-trillion program but 9.6 percent higher than last year’s level.
DBCC Chair and Budget Officer-In-Charge Tina Canda said state expenditures went below the program because agencies are still in the adjustment period as their implementation of projects and activities were affected by the pandemic.
“So our infra agencies primarily are the worst hit and some of our disbursement patterns for instance, for travel, for training…[have] been put on hold as a result of this pandemic and we hadn’t anticipated that. So that’s the reason why disbursements are not as high as we expected it to be,” Canda said in a virtual press briefing.
However, Canda said initial figures show a significant jump in disbursements in the last two months.
“Probably because at that time agencies thought there would be no [2021 budget validity] extension. It will also factor in the behavior of agencies,” she said.
For 2022, the total disbursement program was maintained at P4.955 trillion while for 2023 and 2024, this was slightly adjusted upwards to P5.059 trillion and P5.347 trillion, respectively.
Given the higher-than-target revenues and lower-than-programmed disbursements for 2021, the deficit program for this year is estimated at a lower level of 8.2 percent of GDP or P1.606 trillion.
Moreover, the budget deficit is expected to move in a downward trajectory with 7.7 percent of GDP in 2022, 6.1 percent of GDP in 2023, and 5.1 percent of GDP in 2024, as the government continues to pursue a fiscal consolidation strategy over the medium term.
In the same DBCC meeting, the DBCC also approved the proposed 2023 cash-based national budget at P5.242 trillion, 4.3 percent higher than the budget ceiling for 2022 at P5.024 trillion.
Despite the higher budget ceiling for 2023, Canda expressed confidence that agencies would be able to spend the funds that would be allotted to them.
“We expect that in a couple of months perhaps as our Covid cases fall and our restrictions also ease, there would be a significant increase in implementation of agencies,” she said.
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