Nomura: Budget delay unlikely

Tokyo-based Nomura Securities Ltd. has kept unchanged its economic forecasts for the Philippines following developments as the low likelihood of another 2020 budget delay.

“Supporting our view that another budget delay is unlikely next year, Congress is on track to pass the 2020 Budget before year-end,” Nomura said.

According to the financial holding firm, the Senate’s approval of the budget paves the way for the bicameral committee deliberations on 29 November to reconcile differences in their respective versions.

Also, Nomura said every step of the year’s budget approval process has been accomplished earlier, which means even lower likelihood of another budget delay.

“We find noteworthy the fact that on 26 November, the Senate also approved a bill to extend the validity of the 2019 budget through 31 December 2020,” Nomura explained.

“This is relevant because, after the shift to cash-based budgeting, government agencies are required to spend their allocations within the fiscal year. So the four-month delay to passing the 2019 budget necessitated the extension of its validity beyond this fiscal year,” it added.

Such move will allow the government to disburse its unspent allocations in the early part of 2020, instead of being sent back to the Treasury.

Given this outlook, Nomura remained optimistic that the Philippines will be able to hit its 6 to 7 percent gross domestic product (GDP) growth target for 2019 and was expected to continue towards 2020.

“All of these factors support our view of a V-shaped growth trajectory in coming quarters, driven by accelerating public investment spending and strengthening overall domestic demand,” it explained.

“We therefore reiterate our above-consensus GDP growth forecasts of 6 percent in 2019 and 6.7 percent in 2020,” it added.