DBCC to review targets in ‘special meeting’

THE cabinet-level Development Budget Coordination Committee (DBCC) will convene in a “special meeting” early next month to review its macroeconomic assumptions and fiscal targets through 2028, Budget Secretary Amenah F. Pangandaman said.

“I think we scheduled it sometime in November,” Ms. Pangandaman, who also chairs the DBCC, told reporters on the sidelines of an event on Friday.

The DBCC in June maintained its gross domestic product (GDP) growth target for this year at 6-7% and 6.5-7.5% for 2025. It also expects the economy to grow by around 6.5-8% between 2026-2028.

Ms. Pangandaman has raised the possibility of an upgraded 2024 growth target amid slowing inflation and improved public spending.

However, Finance Secretary Ralph G. Recto said last week that any changes to the government’s macroeconomic targets will be for next year.

The DBCC is also set to meet in January to review the Medium-Term Fiscal Framework (MTFF), Ms. Pangandaman said.

According to a 2022 resolution adopted by Congress, economic managers should review or update the MTFF in three years, or by 2025, before the start of the 20^th Congress.

“By 2025, there is a provision there that we need to review the MTFF,” she said.

The MTFF aims to consolidate the National Government’s (NG) resources to ensure that these are efficiently utilized and generate multiplier effects for the economy.

Based on the MTFF, the government aims to lower debt as a share of GDP to 60.6% by the end of 2024 and to 60.4% by the end of 2025. It also sees the debt-to-GDP ratio falling to 60.2% in 2026, 58.4% in 2027 and 56.3% in 2028.

At the end of June, the NG debt-to-GDP ratio was 60.9%, still above the 60% threshold deemed by multilateral lenders as manageable for developing economies.

Meanwhile, the government expects the deficit-to-GDP ratio to decline to 5.6% this year, according to the MTFF. It is expected to fall steadily to 5.35% in 2025, 4.73% in 2026, 4.13% in 2027, and 3.72% in 2028.

In the first half, the deficit-to-GDP ratio stood at 4.9%, against the 4.8% ratio posted a year earlier.

2025 BUDGET SIGNING
Meanwhile, President Ferdinand R. Marcos, Jr. is scheduled to sign the 2025 General Appropriations Bill, next year’s proposed budget, into law before the holiday break, according to Ms. Pangandaman.

“Based on the calendar that I saw, by end of November, the Senate will be finished (passing the budget.) So, maybe give them at least one to two weeks for the bicam,” she said.

“I expect that the budget will be passed at the same time as last year, maybe (Dec.) 18, 19, or 20, sometime before Christmas.”

The House of Representatives passed its budget bill on Sept. 25.

After the Senate approves its version, legislators from both chambers will harmonize both versions of the budget bill in bicameral conference before sending the measure to the Palace for signing.

Next year’s P6.352-trillion spending plan is 10.1% higher than the P5.768-trillion budget this year and is equivalent to 22% of GDP.

In reviewing the government’s growth and fiscal targets, the DBCC must assess whether there have been improvements in macroeconomic stability, private and public sector efficiency, and infrastructure, Ateneo Center for Economic Research and Development Director Ser Percival K. Peña Reyes said via Viber.

More than reviewing its targets, the government must adopt “bolder reforms” to address the tight fiscal space, Action for Economic Reforms coordinator Filomeno S. Sta. Ana III said via Viber.

“Further economic performance could have been better if government would be more decisive in addressing the narrow fiscal space through bolder reforms,” he said, citing the need to introduce new taxes or reform the military pension system.

Jonathan L. Ravelas, senior adviser at professional services firm Reyes Tacandong & Co., said the Philippine economy will likely grow between 5.8-6% this year, slowed by tepid consumption.

If realized, this would fall below the DBCC’s current 6-7% full-year growth target.

“Although first half has averaged 6%, I don’t see it maintaining in the third and fourth quarter,” he told reporters on the sidelines of the same event on Friday.

“That’s because of consumption… people aren’t feeling the drop in inflation.”

In the three months to June, private consumption grew 4.6% year on year, the weakest reading since the first quarter of 2021.

In the year to date, inflation averaged 3.4%, settling within the central bank’s 2-4% target range.

Third-quarter GDP data will be released on Nov. 7. — Beatriz Marie D. Cruz