Gov’t remains committed to mid-term fiscal plan

MANILA, Philippines - The government remains committed to its medium-term fiscal consolidation program even as it maintains robust levels of spending to further spur economic growth, Finance Secretary Cesar V. Purisima said.

On the sidelines of the Bangko Sentral ng Pilipinas’ Annual Bankers cocktails Friday, Purisima said the government is hoping to sustain the country’s rapid economic growth by continuing to implement sustainability programs, pumping up infrastructure spending and improving processes to attract more investors and create jobs.

Purisima said the country is on track in its fiscal consolidation path that aims to trim its budget deficit to two percent of economic output starting this year until the end of the Aquino administration in 2016.

The government had set a budget deficit target of P279 billion for 2012 or 2.6 percent of gross domestic product (GDP), the value of all goods and services produced within a country in a given period of time. 

“I think we’re very much within that range,” he said.

An upgrade of the country’s credit rating to the long-coveted investment grade status strengthens the government’s chances to meet or even surpass its fiscal consolidation targets, Purisima added.

An upgrade would lower the country’s borrowing cost and expand its base of potential investors.

The government’s pursuit of fiscal consolidation or the policy of reducing deficit and the accumulation of debt, as well as its resolve to increase tax revenues were instrumental in winning eight rating upgrades for the country since President Aquino assumed office in 2010.

Aquino has stepped up the government’s drive against corruption while seeking more than $16 billion of investments in roads and airports to expand the economy to as much as seven percent in 2013.

The economy grew by a surprising 7.1 percent in the third quarter of 2012, exceeding market and government expectations and bringing nine-month growth to 6.5 percent, above the full-year target range of five to six percent.

The Department of Budget and Management earlier said the government would sustain its robust expenditure program this year or even surpass levels posted a year ago.

Based on the approved P2.006-trillion budget for 2013, the lion’s share will go to social services, mostly to the Department of Education (P232.6 billion). The Department of Public Works and Highways will receive P155.5 billion to support the implementation of infrastructure programs.

In the 11 months ending November 2012, the government registered revenues of P1.409 trillion on the back of higher collections.

Expenditures as of November shot up to to P1.536 trillion, 14.1 percent or P190 billion more than the comparable level of P1.346 trillion the previous year. This is the highest growth seen at least in the last six years and a reversal of the 2.1-percent contraction in 2011.