Finance Secretary Carlos Dominguez III said the government is losing the opportunity to provide funds amounting to around P500 a million a day for better education and healthcare as well as infrastructure and job creation with every week that the government is forced to operate on a reenacted budget.
Dominguez expressed the hope that the two houses of the Congress would be able to break their impasse on the 2019 General Appropriations Bill (GAB) soon enough, given that it would take about a month after its transmittal to Malacañang--and its subsequent enactment into law by the President Duterte--for this year's national budget program to take effect.
After Malacañang receives the GAB, Dominguez said it would take the Department of Budget and Management (DBM) a few days at the least to go over the transmitted document, after which the President will review it as well before signing it into law.
Provided that it would take only about a week for the DBM and the President to go over the budget, it will still take another two weeks from publication of the GAB for it to take effect, eating up a good three to three-and-half weeks before projects under the 2019 budget could begin implementation, he said.
“For the first quarter of the year, the fact that we did not have the budget that we presented meant that we had P46 billion less to spend in the first 90 days. Now, if you divide P46 billion into 90 days, that's half a billion pesos a day that we are not spending to create jobs, that we are not spending to improve the infrastructure, that we are not spending for better healthcare, better education,” Dominguez said during a recent press briefing.
As for the opportunity to frontload spending for infrastructure modernization projects, Dominguez said the opportunity was also lost to fast-track construction work during the dry season, considering that the government has been running on a reenacted 2018 budget since January.
“Given the weather conditions, given the government procurement systems, it's really going to be very difficult to catch up,” Dominguez said. “That's why it's so critical and so sad that we missed the best time to start construction projects.”
In a joint statement issued Wednesday, the Development Budget Coordination Committee (DBCC) said that upon reviewing the approved revenue and disbursement programs, along with the deficit goals for the medium term, it adjusted the Gross Domestic Product (GDP) growth target range to 6-7 percent in 2019, 6.5 -7.5 percent in 2020, and 7.08 percent from 2021 to 2022.
But Dominguez noted that a 6-7 percent GDP target range still remains among the highest in the region.
The DBCC, of which Dominguez is a member, estimated the impact on economic growth of the continued budget reenactment at -0.7 to -0.9 percentage points (ppts) if the budget is reenacted until April 2019, -1.4 to -1.9 ppt if until August 2019, and -2.1 to -2.8 ppt under a full-year reenacted budget.
"We therefore urge Congress to transmit the 2019 National Budget at the soonest possible time to Malacañang so the government can sustain its investments on development priorities, namely public infrastructure and social services. The longer the budget impasse lasts, the larger the adverse effect to the Philippine economy and its people," the DBCC said in a statement released after its Wednesday meeting.
Revenue collections are projected to reach P3.15 trillion in 2019, equivalent to 16.2 percent of GDP, the highest in recent years.
Revenue measures from the tax reform program are projected to contribute P162.2 billion to the government’s coffers in 2019, taking into account the Tax Reform for Acceleration and Inclusion (TRAIN) Law and the approved Package 1B on the amnesty for estate and delinquent taxes, minus the implementation of the e-receipts system this year, the DBCC said.
Meanwhile, disbursements are targeted to reach P 3.78 trillion in 2019, assuming the national budget is reenacted for the first quarter of the year. The disbursement target is equivalent to 19.4 percent of GDP, it added.
The DBCC said that given the approved revenue and disbursement programs, the corresponding nominal deficit target is set at P 631.5 billion in 2019, equivalent to 3.2 percent of GDP.
From 2020 to 2022, the deficit target will be maintained at 3.0 percent of GDP, “striking a good balance between fiscal discipline and higher investments for urgent programs and projects,” the DBCC said.