Economy expanded over 6% in Q3—ING
The local unit of the Netherlands-based ING Bank said the Philippine economy likely grew more than 6 percent in the third quarter, led by higher government spending.
ING Bank Manila senior economist Joey Cuyegkeng and both government expenditures and revenues were expected to rise in double-digit figures in September.
“Government is expected to report September fiscal performance within the next couple of weeks. We expect government to post a September headline and core spending growth of around 15 [percent] to16 percent year-on-year while revenues could show a 19-percent increase,” Cuyegkeng said in a report Tuesday.
“These imply a fiscal deficit of more than P70 billion. The needed boost in government spending would support a GDP growth of more than 6 percent in the third quarter,” Cuyegkeng said.
The government said last week that September tax collections increased significantly. BIR collections were 21.5 percent higher from a year ago. The collection included P12 billion of tax-settlement related collections.
“The tax settlement collection of P5.8 billion is expected this month and another P8.5 billion is expected in November. These tax settlement payments are part of the settlement between government and Mighty Corp. News last Friday was about Custom’s tax collections which were 18.7 percent higher year-on-year,” Cuyegkeng said.
Meanwhile, Finance Secretary Carlos Dominguez III said an average growth rate of 7 percent this year and beyond would be sustainable as macroeconomic fundamentals remained solid and strong.
Dominguez said a speech during the annual meetings of the World Bank Group and the International Monetary Fund in Washington D.C. that the Philippines emerged as an important engine of growth for the East Asian region.
“We are now the second fastest-growing economy in the region. We are aspiring to achieve a growth rate of 7 percent this year and through the medium term. That is a rate of growth we consider sustainable given our macroeconomic fundamentals,” Dominguez said.
“It is a rate of growth that will happen through increased investments in modernizing our infrastructure,” Dominguez said.
He said the increased investments in infrastructure would be pursued without sacrificing the fiscal stability the government worked so hard to achieve. He said the government intended to fund the investments through official development assistance loans and a substantially broader revenue base.
He said a comprehensive tax reform program was prepared to ensure a reliable flow of revenues. This will help the government reshape economic growth to be investments-led, he said.
The first package of the tax reform measure was approved by the House of Representatives on May 31. The Senate is now tackling HB 5636 along with SB 1408 that was filed by Senate President Aquilino Pimentel III and which is the original DoF version.
Dominguez said the new revenue architecture would be conducive to investments, simpler and easier to implement and a powerful tool for achieving inclusive economic development for the Philippines.
“We expect the new tax policies introduced in this component to be enacted by the end of the year,” he said, adding the investment community warmly welcomed this package of measures and would consider the enactment an indication of the government’s political will.
He said the infrastructure program would be the main stimulus to help sustain high growth.
The Duterte administration earlier identified 75 big-ticket infrastructure projects under the ambitious P8.44-trillion “Build, Build, Build” program. Under the program, the government aims to build more roads, bridges, seaports, airports, railways and water and irrigation projects across the country to spur more economic activities and create more jobs.
A subway is also being planned for construction in Metro Manila to decongest the metropolis of heavy traffic that was causing billions of pesos in economic losses daily.