DBCC sees 8-9% growth in ’21
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HE Cabinet-level Development Budget Coordination Committee (DBCC) is now projecting a higher GDP growth rate of 8 to 9 percent for 2021 and a lower GDP growth rate of 6 to 7 percent for 2022. According to several government officials interviewed by the BusinessMirror, the government’s economic managers are seeing that the economy would grow faster next year on the back of expected additional infrastructure investment for the year to stimulate the economy. The DBCC’s new GDP growth projection for 2021 is higher than its earlier projection of 7.1 to 8.1 percent. But its new GDP growth projection for 2022 is lower than its earlier projection of 7 to 8 percent during its special meeting on May 12. Both Budget Secretary Wendel E. Avisado, who is DBCC chairman, and Finance Undersecretary and Chief Economist Gil Beltran confirmed to the BusinessMirror the revised GDP growth projections that underwent DBCC ad referendum approval. Acting Budget Assistant Secretary Kim de Leon also confirmed the revisions to the BusinessMirror,
noting that the increased infrastructure spending next year is expected to create additional jobs and pump prime the economy. De Leon also said the DBCC ad referendum approval took place on May 27. “DBCC adjusted levels in 2021 in view of the expected additional infrastructure investment in 2021 to pump prime the economy, which is also expected to create additional jobs,” De Leon said in a message. Meanwhile, the GDP growth projection for 2022 was revised downward due to the base effect. “The downward adjustment in 2022 was due to the base effects of the upward prospect for 2021,” he added. Asked how much would be the expected additional infrastructure spending for 2021, Beltran said it is about P120 billion, “assuming that the DBCC ad ref was approved.” “That’s why bounce back is rapid. BBB [Build, Build, Build] has a high multiplier because the projects had high rates of return,” he said, referring to the government’s massive infrastructure program. For this year, Beltran said the DBCC is keeping its earlier projection that the economy would contract by 2 to 3.4 percent. This could be the country’s worst GDP growth rate
since the country’s economy contracted by 6.9 percent in 1985 based on 2018 constant prices. Given the increased spending and drop in revenue collections, the country’s budget deficit is seen to balloon to P1.56 trillion or 8.1 percent of GDP based on the macroeconomic assumptions approved by DBCC on May 12 in its special meeting. Despite increased deficit spending, the national government’s deficit-to-GDP ratio will remain in the median of comparable countries in Southeast Asia and East Asia, among peers with similar credit ratings, and among other emerging-market economies, DBCC said. This, as long as the ratio does not exceed 9 percent. Below this threshold, the DBCC said the debt-toGDP ratio will be around 50 percent, far lower than the most recent peak of 71.6 percent in 2004. In 2019 the government recorded a budget deficit of P660.2 billion or 3.55 percent of GDP, exceeding the administration’s target of 3.25 percent of GDP for the year. Last year, the country also enjoyed its lowest-recorded debt-to-GDP ratio of 39.6 percent of GDP. A budget deficit occurs when expenditures exceed revenues, while debt-to-GDP ratio is used to gauge a country’s ability to pay off its debt.
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GRADE-SCHOOL teacher Emie Viscaya of Noah’s Ark Angel Learning School Center in Manila briefs parent Ivy Garcia on the conduct of online learning. The Department of Education said that, in the absence of face-to-face classes, the delivery of education will be available online, as modular, blended, or through radio and television. (Right photo) Parents drop their children’s enrolment and survey forms in boxes placed outside the Parañaque Elementary School Central in keeping with physical-distancing measures. Among the questions asked in the survey is the learner’s household capacity for and access to distance learning, such as the availability of electronic devices and Internet connectivity. ROY DOMINGO
By Jovee Marie N. Dela Cruz & Butch Fernandez
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AWMAKERS in both chambers raced on Wednesday to approve the remaining measures to deal with the Covid-19 crisis, with an eye to ensuring the multibillion-peso public funds go to sectors most hammered by the lockdowns induced by the pandemic.
Senators rushed to approve on second reading the P140-billion Bayanihan to Recover As One Act, which, like the first Bayanihan Act,
is time-bound and is targeted at mitigating the impact of Covid-19. To curb transmission of the deadly respiratory disease, the govern-
ment had imposed lockdowns since mid-March, shuttering businesses and schools. The paralysis is forecast by some experts to cause the gross domestic product to shrink by as much as 9.6 percent in the second quarter. The original Bayanihan to Heal As One Act lapses on June 24, and Bayanihan II has a shelf life until September. Senators tried to sift through provisions on Wednesday to ensure that the responses take into consideration this timeline. The Bayanihan II is broken down, in the Senate version, into these key responses to the health and economic crisis, as amended: Emergency subsidies, P15 billion; Prevention and control of other diseases, P10 billion; Capital infu-
sion to government financial institutions (GFIs), P50 billion; Support programs for impacted sectors, P17 billion; Support to agriculture sector, P17 billion; Assistance to transportation sector, P17 billion; Assistance to tourism, P10 billion; Smart campuses, P3 billion; Tesda training, P1 billion. The total package was reduced from P157 billion to 140 billion after senators worked overnight on Tuesday to introduce amendments to ensure the second relief package has a sharper focus on targeted beneficiaries, amid criticism that millions of ordinary Filipinos deserving of government aid during the quarantine period did not get these. Continued on A2
‘Extend grace period for Covid-hit sectors’ T LONTOC: “More people are expected to fall into poverty. Given these developments, the risk of more people defaulting on payments is evident.”
HE Philippine economy may take a turn for the worse should the government not extend further the grace period for payment of rent and utilities to ease the financial burden of consumers, experts have warned. Economist Genesis Kelly S. Lontoc of Ateneo De Manila University warned that more people would be defaulting on their payment on rent, utilities and housing loans given the huge impact of Covid-19 on the country’s economy.
PESO EXCHANGE RATES n US 50.3440
“The GDP is projected by the DBCC [Development Budget Coordination Committee] to decline by -2.0 to -3.4 percent in 2020. Unemployment is expected to worsen. OFW [overseas Filipino workers] remittances are projected to fall. More people are expected to fall into poverty. Given these developments, the risk of more people defaulting on payments is evident,” Lontoc told the BusinessMirror, where he writes about personal finance.
Asked for estimates on the number of people who may default on their payments, Lontoc said an “indicator” could be the number of displaced workers. Labor Assistant Secretary Dominique Tutay on Sunday told the BusinessMirror affected workers due to the pandemic have reached 2.8 million from more than 103,000 establishments in temporary closure and flexible-work arrangements. Continued on A4
‘VIRUS TO DEEPEN FOOD INSECURITY, POVERTY IN ASIA’
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By Jasper Emmanuel Y. Arcalas
HE Covid-19 pandemic could worsen food insecurity and poverty in Asian countries, including the Philippines, as consumers lose access to nutritional food, the International Rice Research Institute (IRRI) said. In their latest policy brief, IRRI experts said Covid-induced lockdowns and other health safeguard measures implemented in the region have affected millions of rice value chain (RVC) actors or players. The policy brief was authored by IRRI Country Representative for Bangladesh Humnath Bhandari, IRRI Agrifood Policy Platform Leader Jean Balié, IRRI Agricultural Economist Valerien Pede and IRRI South Asia Regional Representative Nafees Meah. These measures, which range from stay-at-home orders, social distancing, mobility restriction to border closures, had “ripple effects” on RVC as economic activities have been either stalled or limited, the policy brief pointed out. The IRRI experts also cited various factors that disrupted the RVC in recent months—limited or no access to inputs or services, labor and transport shortage, shortage of farm machinery and financial capital, trade and travel restrictions, income shock, and reduced food demand, among others. The policy brief said disruptions in the RVC were felt in all of its segments, from production, processing, to marketing and consumption areas. The disruptions resulted in lower palay yield, decreased demand for milled rice, and higher food prices due to unavailability of staple stocks, among others. “We observed significant impacts on the consumption of food in terms of lower demand, changed purchasing and consumption behavior, and increased food insecurity and malnutrition,” the policy brief read. “The disruptions in food supply, the income drop, and food price hike will have a huge impact on food and nutrition security, especially for the poor. The existing large number of undernourished population in Asia (513 million according to pre-Covid-19 estimates) is projected to increase significantly due to the pandemic,” it added.
See “Poverty,” A2
n JAPAN 0.4635 n UK 63.1868 n HK 6.4955 n CHINA 7.0862 n SINGAPORE 35.9497 n AUSTRALIA 34.6769 n EU 56.2393 n SAUDI ARABIA 13.4161
Source: BSP (June 3, 2020)