Strong Fiscal Performance Needed to Lift Philippine Growth: Economist

An economist of ING Bank Manila said the August 2017 fiscal report of the Philippine government “did not disappoint” but stressed the need for a “strong fiscal performance” to lift third-quarter growth.

Last week, the Bureau of the Treasury (BTr) reported a PHP28.8 billion budget surplus for August this year, lower than the PHP32.6 billion surplus same period last year.

Revenues grew by 10 percent to PHP230.4 billion and expenditures by 14 percent to PHP201.6 billion.

As of end-August this year, the budget gap stood at PHP176.2 billion, 27 percent up from the PHP138.4 billion same period last year.

ING Bank Manila senior economist Joey Cuyegkeng, in a research note, said “the government’s budget surplus last August might not only be due to improvement in collections but also with one-off revenue gains likely to be related to tax settlement inflows.“

“The higher deficit is likely a reflection of better utilization of the programmed spending,” he said.

“August (fiscal report) did not disappoint but the acceleration in spending was milder than we expected,” he said.

Cuyegkeng explained that they projected “close of 20 percent” year-on-year growth in spending in the eighth month this year but noted that below expected spending growth “may have to do with some accounting and booking delays.”

“The improvement should help overall economic growth to remain close to 6.5 percent in 3Q despite manufacturing growth indicators posting some moderation,” he added.

Growth in the second quarter this year rose slightly to 6.5 percent from quarter-ago’s 6.4 percent.

The government’s full-year growth target is a range between 6.5-7.5 percent.