There's a falling likelihood of another budget delay in 2020, a global bank says
MANILA, Philippines — Another budget delay is unlikely to happen next year, boding well for the economy in the coming quarters, a global bank said Thursday.
The Senate on Wednesday approved on final reading its version of the P4.1 trillion national budget for 2020, which President Rodrigo Duterte certified as an urgent measure.
“Compared to the 2019 Budget which suffered a four-month delay and contributed to the growth slowdown in H1 2019, every step of this year’s budget approval process in congress has been done much earlier,” Euben Paracuelles, economist at Nomura, said in a commentary.
“This appears to leave the bicameral committee with sufficient time to agree on a final version of the budget before Congress goes on recess on 20 December, and indeed for the president to enact the budget before the start of the new year,” Paracuelles added.
The Philippine economy expanded 5.5% in the second quarter, weaker than 5.6% recorded in the preceding three months after the delayed approval of the 2019 budget left new projects unfunded and disrupted state spending.
But the economy managed to rebound in the third quarter, growing 6.2% during the period with construction, which expanded 16.3%, contributing the most to gross domestic product growth.
According to Nomura, while it is still possible for deliberations in the committee to take longer if there are difficulties in ironing out some differences, a budget impasse as lengthy as the four-month delay this year “now seems highly unlikely.”
“All of these factors support our view of a V-shaped growth trajectory in coming quarters, driven by accelerating public investment spending and strengthening overall domestic demand,” Paracuelles said.
“We therefore reiterate our above-consensus GDP growth forecasts of 6% in 2019 and 6.7% in 2020,” he added.