Dominguez: Ceiling on spending could be raised this year
MANILA, Philippines – The Duterte administration's plan to ramp up spending could be set in motion as early as this year.
Newly-installed Finance Secretary Carlos Dominguez III said in a chance interview on Monday, July 4, that the planned raising of the debt ceiling to 3% of gross domestic product (GDP) instead of the current 2% will be on the agenda of the first inter-agency Development Budget Coordination Committee (DBCC) to be held Tuesday, July 5.
"Probably we hope to do it this year, starting this year. Again, let us talk with the DBCC. We will talk to them," Dominguez said when asked if the 3% deficit ceiling will be implemented in 2016.
Raising the debt ceiling would allow for more deficit spending, or government spending using borrowed money rather than revenue, which Budget Secretary Benjamin Diokno said the administration plans to do in order to bolster the country's infrastructure. (READ: Purisima to critics: PH debt position 'best in 18 years')
Former finance secretary Cesar Purisima had said there is enough fiscal space in government accounts to allow for more spending on infrastructure and social services.
The expected increase in spending is also one reason why Dutch financial multinational ING raised the country's growth forecast for this year and 2017.
"We will talk to the DBCC about the targeting. One of our problems, as you all know, is the absorptive capacity. Let us not kid ourselves also, we have to be realistic about our target," Dominguez added.
The new head of the Department of Finance (DOF) also left little doubt where the money would be spent once the ceiling is raised.
Dominguez said he had just been to the Public-Private Partnership (PPP) Center, where he noticed that there were few infrastructure investments in Mindanao and the Visayas, as 95% of the infrastructure projects are in Metro Manila.
"It has to be rethought that is why we are meeting with the PPP Center for them to rethink the whole program and to encourage other people to make proposals. Like for instance, we have to fix at least 6 major airports in the country, and upgrade a couple more," he noted.
"Basically the agenda in [Tuesday's] DBCC meeting is how do we make the budget, a Duterte budget, for the rest of the year and for next year... basically reorienting according to what the mandate of the people was," Dominguez said.
New National Economic and Development Authority (NEDA) Director General Ernesto Pernia also said that the plan is to have the 2017 budget ready 30 days after Duterte's first State of the Nation Address, which is set for July 25.
"In that budget, we are going to make sure that budget allocations are spent for purposes they are intended for, and spent quickly and efficiently," Pernia said.
He added that they are looking for ways to speed up projects.
"We hope to be able to enjoy the outcomes of these projects even during our term, in the next 6 years because many of these projects, especially infrastructure projects, take time," Pernia said.
"The gestation period is pretty long. Energy projects may be a year to 3 years, roads, airports, transport projects, also take a long time."
Along with setting up the 2017 budget, the DBCC meeting will also incorporate a review of medium-term macroeconomic assumptions and medium-term fiscal targets for 2016 to 2022, among others.
The NEDA chief emphasized that getting immediate results is the priority.
"We also want to be able to show some tangible results already within the first 100 days, especially in terms of easing, to some extent, the traffic congestion in Metro Manila,” he said.
Along with traffic, Pernia also identified law and order as well as reduction in red tape, especially processing times in getting government documents, as other areas where immediate results could be felt. – Rappler.com