While current developments such as the coronavirus disease of 2019 (COVID-19) outbreak pose a risk to the country’s local output, these weren’t expected to affect economic growth drastically.
This was learned from Department of Finance (DoF) Secretary Carlos Dominguez III as he noted the recent positive developments like the on-time passage of the 2020 national budget and the sustained momentum in government spending to temper possible economic risks.
“The year 2020 began with some unexpected challenges. The spread of the African swine fever, the ongoing activity of the Taal Volcano (and) COVID-19. While these developments may dampen our growth, these threats are not enough to force a dramatic reduction in our growth estimates,” Dominguez said during the Wallace Business Forum in Makati City.
Public spending backs policy
“Greater public spending in infrastructure and social services, supported by an expansionary monetary policy and a benign inflation rate, should allow us to dramatically increase our pace of growth this year,” he added.
According to him, while full scale impact of both the Taal volcano eruption and COVID-19 remains too early to tell, the government have already responded to address such risks.
Also, the DoF chief listed other developments that will help support higher gross domestic product (GDP) growth.
“By maintaining fiscal discipline, we have worked down our debt load to a sustainable 41.5 percent of GDP in 2019 from 44.7 percent in 2015. We continue to register remarkable improvement in our revenues even as we await the enactment of the remaining packages of the comprehensive tax reform program,” Dominguez explained.
54% jump in collections
“(Likewise), our collections improved by 54 percent. Stronger revenue performance enabled us to fund President Duterte’s ‘Build, Build, Build’ program. With enough fiscal space, spending on infrastructure dramatically grew by 42 percent last year compared to 2015,” he added.
Moreover, the Cabinet official noted the improved tax effort and dividend collections from government-owned and controlled corporations to help support higher GDP expansion.
Earlier, some private sector economists casted the possibility of a miss or even a sub-6 percent GDP growth versus the government’s 6.5 to 7.5 percent target owing to the dreaded COVID-19 outbreak.
While at it, the government’s most senior economic officials shrugged off any significant impact of the disease noting that such could be resolved within the first half of the year.