The financial team of President Rodrigo Duterte is confident that the sky-high inflation in 2018 will not occur again for the remainder of his term, as the government is ramping up reforms and external forces are becoming favourable.
The Development Budget Coordination Committee (DBCC) even lowered the inflation outlook for 2019 to between 2.7% and 3.5% at its 176th session. The previous outlook was 2% to 4%.
Due to the rise in food production and the enactment of the rice tariff law, the DBCC reduced the estimated variety. The inflation hypothesis remained at 2% to 4% for 2020 to 2022. These estimates are much smaller than in 2018, when inflation reached as high as 6.7%.
The DBCC also retained most of its economic assumptions. The projected growth in gross domestic product (GDP) was retained at 6 percent to 7 % for 2019, 6.5 % to 7.5 % for 2020, and 7 % to 8 % for 2021 and 2022.
Economic growth slowed down to a 4-year low of 5.6 percent in the first quarter of 2019, which implies the state needs to play catch-up to reach the objective.
Meanwhile, income receipts are expected to achieve P3.15 trillion in 2019, 16.4 percent of GDP. In 2019, disbursements are aimed at hitting P3.77 trillion, which is 19.6 percent of GDP.
For 2020, revenues are projected to increase to P3.54 trillion, which is 16.7% of GDP, while disbursements are programmed at P4.21 trillion or 19.9% of GDP.
Projections of revenue and disbursement are projected to increase to P4.42 trillion (17.2 percent of GDP) and P5.24 trillion (20.4 percent of GDP), respectively, by 2022.
Given the revenue and disbursement program, the deficit target was maintained at 3.2 percent of GDP between 2019 and 2022. Economic executives said the figure was maintained to maintain government investment in infrastructure and human capital growth.
The DBCC proposed a budget of P4.1 trillion for 2020, 12% higher than in 2019 and equivalent to 19.4% of GDP. The team said it will submit the proposal within the 2nd week of August.