Duterte blames lawmakers’ pursuit of pork for Q1 slump (video)

Duterte blames lawmakers’ pursuit of pork for Q1 slump (video)

President Rodrigo Duterte blamed the nation’s lawmakers over the weekend for the country’s sluggish gross domestic product (GDP) growth in the first three months of this year.

Speaking at a Hugpong ng Pagbabago’s (HNP) miting de avance rally the President said that if the budget had been approved on schedule and disbursements were able to be made promptly, GDP growth in the first quarter would have risen to 7.2 per cent.

Growth fell to its lowest since 2015 Video CNN Philippines

The Philippine Statistics Authority (PSA) said the Philippine economy grew at 5.6 per cent in the first quarter, down from a revised 6.3 per cent in Q4 2018. The growth is the country’s weakest since Q1 2015 when GDP growth hit 5.1 per cent.

Months of bickering between the senate and the House of Representatives over alleged graft delayed approval of the PHP3.757 trillion (about US$71 bln) national budget for 2019 and stifled GDP) growth, President Duterte said.

Responding to the President’s comments, Department of Finance (DOF) undersecretary and chief economist, Gil S Beltran, said “the economy could have grown 7.2 per cent in Q1 if not for the delayed approval of the 2019 General Appropriations Act (GAA)”.

A Q1 2019 growth of 7.2 per cent would have been the fastest Philippines quarterly growth since the second quarter of 2013. Quarterly Philippines GDP growth has not broken through 7 per cent since Q3 2013.

Lawmakers greed cuts economic growth

The national budget was delayed more than three months as lawmakers challenged what they saw as excesses — referred to as ‘pork’ in the Philippines — inserted in the allocation for the Department of Public Works and Highways (DPWH).

Underspending for the first quarter amounted to P69.5 billion
Underspending for the first quarter amounted to P69.5 billion Jon Manosca

The row came amid claims made by Senator Panfilo Lacson that more than PHP130 billion ($2.480 bln) and hundreds of billions of pesos were hidden in the national budget of 2018 and 2019 respectively.

President Duterte signed the 2019 budget on April 15, but only after removing PHP95.37 billion ($1.818 bln) worth of public works appropriations from the original spending plan, saying the items were ‘unconstitutional’.

Throughout Q1 2019 the Philippines civil service, agencies, and departments have operated under a re-enacted 2018 budget.

The uncertainty over when funds would be be available saw the administration put several large projects on hold, setting off spending cutbacks and stifled economic activity.

Socioeconomic Planning Secretary, Ernesto Pernia, said “we have forewarned repeatedly, the re-enacted budget would sharply slow the pace of our economic growth.

“We estimate that we should have grown by as much as 6.6 per cent this first quarter if we were operating under the 2019 fiscal program”.

Underspending drags down growth

Mr Beltran said the lack of uncertainty on when the budget would be enacted saw administrators act with frugality.

Underspending in the first quarter totalled some PHP69.5 billion ($1.325 bln), cutting 1.6 per cent from GDP growth. Bureau of the Treasury (BTr) figures show that national government disbursement dropped 8 per cent to PHP287.3 billion ($5.478 bln) for the quarter.

Prior to President Duterte’s finger-pointing on the weekend,Finance Secretary Carlos G. Dominguez III had reported that state spending fell by some PHP75 billion ($1.430 bln) in the January to March period, at “an estimated loss of P1 billion (US$19 mln) per day”.

Mr Beltran said government consumption grew by 7.4 per cent in Q1 2019, while capital formation/ investment was up 6.8 per cent: this compared to 13.6 per cent and 10.3 per cent respectively in the same quarter of 2018.

Plus 6% growth still achievable

Socioeconomic Planning Secretary, Ernesto Pernia: To reach the full year growth target of 6 per cent to 7 per cent, the economy will need to expand by an average of 6.1 per cent over the next three quarters.
Socioeconomic Planning Secretary, Ernesto Pernia: To reach the full year growth target of 6 per cent to 7 per cent, the economy will need to expand by an average of 6.1 per cent over the next three quarters. Department of Finance

Public construction, he said, grew by just 8.6 per cent in Q1 2019, compared with 22.6 per cent a year prior, while the drought brought on by El Niño saw agricultural growth at a meagre 0.8 per cent.

Following enactment of the budget last week Mr Dominguez and Mr Pernia, along with acting Department of Budget and Management (DBM) secretary, Janet B. Abuel, expressed optimism that the Philippines will still post high GDP growth for 2019.

While earlier passage of the budget would have enabled the government to fast-track the implementation of its ‘Build, Build, Build’ infrastructure projects, Mr Dominguez said that 5.6 per cent growth in the first quarter was “a decent expansion.

“Economic growth is expected to finish stronger over the rest of 2019 as the government puts its infrastructure expansion plans into overdrive”, the three said in a joint statement.

To reach the full year growth target of 6 per cent to 7 per cent, the economy will need to expand by an average of 6.1 per cent over the next three quarters,Mr Pernia said, adding that “this is still achievable”.


 

Feature photo Jon Manosca

 

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Stella-maris Ewudolu

Journalist at AEC News Today

Stella-maris graduated with a Bachelor of Arts, Education from Ebonyi State University, Nigeria in 2005.

Between November 2010 and February 2012 she was a staff writer at Daylight Online, Nigeria writing on health, fashion, and relationships. From 2010 – 2017 she worked as a freelance screen writer for ‘Nollywood’, Nigeria.

She joined AEC News Today in December 2016.

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