May 19, 2021
In view of the emergence of new COVID-19 variants and the reimposition of the enhanced community quarantine (ECQ) and modified ECQ (MECQ) in the National Capital Region (NCR) Plus area during the second quarter, the emerging gross domestic product (GDP) growth projection for 2021 is slightly adjusted to 6.0 to 7.0 percent from 6.5 to 7.5 percent, according to a joint statement released by the Development Budget Coordination Committee (DBCC).
Further, GDP is projected to return to pre-COVID-19 levels by growing at 7.0 to 9.0 percent in 2022, and will continue to grow by 6.0 to 7.0 percent in 2023 and 2024.
The DBCC, composed of the Secretary of Budget and Management, as chairman; the Socioeconomic Planning Secretary, as co-chairman; and the Executive Secretary, Secretary of Finance, and the Governor of the Central Bank of the Philippines, as members, convened on May 18, 2021 to review the government’s medium-term macroeconomic assumptions, fiscal program, and growth targets for financial year (FY) 2021-2024.
“Our growth prospects and economic recovery will be underpinned by three interventions to arrest the spread of the virus and help the poor cope with the impact of the quarantines,” the DBCC members said.
First is the intensified implementation of the prevent, detect, isolate, treat, and recover (PDITR) strategy and the full vaccination of the residents in areas with the highest risk, such as the NCR Plus, Pampanga, Cebu City, and Davao City.
“By targeting these areas, COVID-19 transmission can be dramatically reduced throughout the country,” they affirmed.
Second is the reduction of the gap from detection to isolation of COVID-19 positive cases from 7 to 5 days, such as the use of digitally assisted contact tracing. This could potentially reduce cases by around 51 percent, according to epidemiological models.
Lastly, around PhP 170 billion would be needed to fund supplemental social support for those hardest hit by the pandemic as well as to fund improved health protocols.
“A version of this proposal is currently being deliberated in the Lower House, and is contingent on raising additional savings and revenues to remain deficit neutral,” they added.
The DBCC approved the revised growth projections given the latest macroeconomic data available and several macroeconomic assumptions.
On the medium-term fiscal program, revenues are maintained at the DBCC approved levels in December 2020 at PhP 2.88 trillion for 2021 and increased to PhP 3.29 trillion for 2022. Meanwhile, as economic activities are expected to pick up over the medium-term, revenue collections are pegged at PhP 3.59 trillion for 2023 and PhP 4.0 trillion for 2024.
On the other hand, estimated disbursements for this year have been adjusted upwards from PhP 4.66 trillion to PhP 4.74 trillion, owing mainly to funding requirements to support Bayanihan II, including the procurement of COVID-19 vaccines, among others. Disbursements are projected to reach PhP 4.95 trillion in 2022, and will further increase to PhP 5.11 trillion in 2023 and PhP 5.40 trillion in 2024.
Given the revised revenue and disbursement program, the deficit program is adjusted upwards to 9.4 percent of GDP for 2021 and then to 7.7 percent of GDP for 2022. The DBCC members also highlighted that they will continue to adopt a fiscal consolidation strategy to gradually bring the deficit back to pre-COVID-19 levels with a projected 6.4 percent of GDP rate in 2023 and 5.4 percent of GDP rate in 2024.
In closing, the DBCC members said they are optimistic that the economy will return to its upward growth trajectory starting this year through the accelerated implementation of the country’s recovery package and rollout of the national vaccination deployment to cover a broader segment of the population.
“We will continue to manage risks and push for the gradual and safe reopening of the economy after addressing the present spike so that people can return to work and the government can address hunger and poverty, while maintaining the strict compliance to minimum public health standards,” the DBCC members said.
(Read the full statement here: Joint DBCC Statement: Review of the Medium-Term Macroeconomic Assumptions and Fiscal Program for FY 2021 to 2024)
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