The interagency Development Budget Coordination Committee warned that the 2023 gross domestic product growth forecast of 6 percent to 7 percent may not be achieved if the elevated inflation is not addressed.
Members of the DBCC briefed the House Committee on Appropriations on Feb. 28 on the country’s macroeconomic situation and growth prospects in light of the persistent battle with high inflation.
The DBCC—-composed of the heads of the Department of Finance, Department of Budget and Management and National Economic and Development Authority—-discussed the impact and implications of rising inflation on the fiscal and external position, growth targets, priority measures and budgetary allocation for targeted assistance projects and policy thrusts of the national government.
It reaffirmed that the full-year 2023 GDP growth target of 6 percent to 7 percent for growth rate remained attainable “so long as domestic risks, especially, are addressed.”
NEDA Secretary Arsenio Balisacan said the implementation of short- and medium-term measures should be aligned with the strategies outlined in the Philippine Development Plan 2023-2028 and enacted in a timely manner.
Balisacan said that by augmenting insufficient domestic food production, importation aimed to curb the adverse effects of high food prices and protect consumer welfare especially for the poor and most vulnerable sectors, whose consumption baskets are largely constituted by food.
Finance Secretary Benjamin Diokno said there was a need to intensify the timely implementation of non-monetary measures to curb persistent inflation and mitigate its impact on the most vulnerable sectors.
Diokno told lawmakers that a short- to medium-term framework was being constructed with the help of the Presidential Management Staff and other relevant government agencies to mitigate inflation.
The DOF proposed short-term interventions from production to importation, post-harvest, storage, distribution and transport of goods to improve every stage of the supply chain.
Apart from these, ground monitoring and assessment will be improved by creating an Inter-agency Committee on Inflation and Market Outlook, he said.
“Ground monitoring will entail further enhancing our early warning systems and situation analysis to ensure timely and immediate intervention from the government,” Diokno said.
The government will expand and improve the KADIWA Program, empowering farmers to sell their produce directly to consumers, the DBCC said.
Fuel discount to farmers and fisherfolk and a targeted cash transfer program will also be implemented to cushion these sectors against shocks.
“[W]e must ensure that these measures do not add up further to demand-side inflationary pressures,” Diokno said.
Inflation in January rose to 8.7 percent, beyond the Bangko Sentral ng Pilipinas inflation forecast of 7.5 percent to 8.3 percent and private sector economists’ median estimate of 7.6 percent.
The BSP raised its policy rate by 50 basis points to 6 percent effective Feb. 17, 2023.