Moody's: Approval of 2020 budget to spur economic growth
MANILA, Philippines — The recent approval of the 2020 national budget should help government spending recover and, in turn, supercharge economic growth this year, analysts at Moody’s Investors Service said Thursday.
President Rodrigo Duterte last Monday signed into law the P4.1 trillion outlay for 2020, his government’s largest spending plan to date.
Although the annual budget is typically passed before the start of the fiscal year, the 2020 budget law was signed earlier than the 2019 outlay, which was approved in mid-April due to an impasse in Congress.
In a research note, Moody’s said it expects a “larger fiscal expansion” this year and for the pace of government spending to “normalize.”
That should help the economy grow 6.2% this year from the estimated 5.8% growth in 2019. If realized, Moody’s 2020 growth forecast for the Philippines would be faster than most of the country’s regional peers and would buck the trend of lackluster global economic growth.
The global debt watcher also expects national government debt to remain stable and debt affordability to improve. The state is also expected to generate more revenues as the scheduled increases in excise taxes on selected goods kick in this year.
“Part of the support to growth will come from budget implementation over the course of a full year,” Moody’s added.
The Philippine economy expanded 5.5% in the April-June period, the weakest in 17 quarters after the delayed approval of the 2019 budget left new projects unfunded and disrupted state spending.
But the economy managed to rebound in the third quarter, growing 6.2% during the period. In the first nine months of 2019, GDP growth averaged 5.8%.
In a bid to power growth, the government said it is preparing a P4.6-trillion national budget for 2021, 13.3% or P540 billion higher than the P4.1-trillion outlay for 2020 and equivalent to 20.2% of the country’s gross domestic product.
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