The 5.6% growth for the first quarter of 2019 came as no shock. Lower than expected, this figure needs to be addressed if our growth is to keep up with our targets.
This is thanks but no thanks to a wrangling congress that delayed budget deliberations over supposed pork barrel insertions that the President vetoed anyway.
Had these been cut out in the first place, the budget could have been approved sooner.
Thus, working on a reenacted budget means having to spend less- around 1 billion pesos per day during the first quarter did set our growth back.
In a statement, the Philippine Department of Finance, thorough Secretary Carlos Dominguez makes it clear:
“By our estimates, the Philippine economy should have grown by at least one percentage point higher, at 6.6 to 7.2 percent in the first quarter, if the 2019 fiscal program had been approved on time. This is no surprise as national government spending accounts for around 20 percent of the economy.”
With this in mind, the only way to meet the stated growth target for the year of between 6.8-7.2% is to spur economic activity. Its time to boost and catch up.
Already, a number of good moves are in place.
The first, the cut in interest rates and the lowering of reserve requirements for banks especially in the midsize and thrift banks subsector will allow them to lend more to fund business expansion or drive consumption.
Expect more people to borrow from banks, and faster loan approvals. Banks generate their income by lending.
Lower inflation, which is now at about 3% is also a blessing since lower prices allow people to spend less for higher volumes of products which in turn, drives production, spurs enterprise and thus expands employment.
But a quicker way to raise economic growth is to boost spending of the recently approved budget. Note that 20% of our growth is attributed to public spending. We have now seen its effect on our growth.
This will require fasttracking infrastructure to make up for lower spending in the first quarter resulting from both the budget delay and the election ban on public works.
The biggest hurdle is the bureaucracy that tends to be slow in implementation. Technology ought to help solve that by allowing us taxpayers to monitor the pace of implementation.
On top of that however, there are vital items that require spending, such as the safety nets that includes the rice competetitveness fund under the Rice Tarrification Law, free state education, the hiring of more teachers to fill up the newly built classrooms, for example.
These new hires come from increased plantilla positions that can only come into full effect under a new General Appropriations act. Reenacted budgets will delay the hiring.
The worst impact is on the poor, that can only be uplifted from government services. The recently approved 4Ps law ought to alleviate poverty and drive consumption in the rural areas that in turn, will spur economic activity. Note that majority of the 4Ps beneficiaries live in remote areas.
Other vital expenditures will be needed to boost growth, especially in the regions.
Infrastructure, for one. Addressing the long infrastructure neglect of the regions is now underway. What we need to do now is monitor implementstion of all the launched projects.
Check out the Department of Public Works and Highways and Department of Transportation websites and social media pages to see how well these projects are implemented and deployed.
Comment and share to enable you to interact and give feedback on slow implementation. This age of technology ought to bring us closer to government and demand that services and programs be implemented with dispatch.
These measures, and our vigilance ought to spur growth.
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