Finance Secretary Benjamin Diokno expects a more robust economic performance in the second half of 2023, driven by faster spending.
“That is also the judgment of the IMF [International Monetary Fund]… that the second-half growth will be faster than the first half. Because historically, the fourth quarter is where most infrastructure projects are done. And typhoons don’t usually occur in the fourth quarter,” Diokno said over the weekend.
Diokno said the catchup plans of government agencies would play a vital factor for faster economic growth in the remaining months of 2023.
“The issue on disbursement [underspending], it was already an issue during the time of PNoy [late President Benigno Aquino III]. Maybe people have already learned their lessons. If not, then underspending will occur,” Diokno said.
The economy grew by 5.3 percent in the first half, weighed down by inflation and underspending. Economic managers said GDP should grow by at least 6.6 percent in the second half to reach the low-end of the target range of 6 percent to 7 percent.
The government is expediting public spending, particularly on infrastructure projects, by directing agencies to put into action their catch-up plans, which aim to enhance budget execution efficiency for the rest of the year.
The Department of Finance highlighted the government’s commitment to allocate at least 5 percent of GDP annually to infrastructure spending.
The Economic Development Group in its meeting recently requested some selected agencies to present their quarterly disbursement amounts, the issues with regard to their allotments and their catch-up plans.
Diokno said the agencies with the highest allotments are the Department of Works and Highways, Department of Transportation, Department of Health, and Department of Social Welfare and Development.
The main challenges identified by the government agencies are seasonality in project implementation with higher disbursements seen in the fourth quarter, takeup of beneficiaries, preparatory activities for procurement, implementation problems and payment issues.
Last week, the IMF cut its growth forecast for the Philippines this year to 5.3 percent from the previous estimate of 6.2 percent.