DBCC rejects IMF’s budget deficit proposal

Published July 30, 2018, 12:00 AM

by manilabulletin_admin

By Chino S. Leyco

The inter-agency Development Budget Coordination Committee (DBCC) decided not to adopt the recommendation of the International Monetary Fund (IMF) to lower the national government’s budget deficit ceiling.

Benjamin E. Diokno
Benjamin E. Diokno

Following the DBCC special meeting yesterday, Budget Secretary Benjamin E. Diokno said that the economic managers will stick with their original budget gap assumptions of 3.2 percent for next year and 3.0 percent in 2020 until 2022.

“In IMF, they really want to be conservative, but we’re not hitting our target if you look at our budget deficit last year, it’s only 2.2 percent,” Diokno told reporters. The Duterte administration had set a 3.0 percent budget deficit to gross domestic product (GDP) ratio in 2017.

Diokno also said that it is hard to reduce the government’s budget deficit program in the middle of the year particularly with the slowdown in the country’s economy during the first three months.

“We’ll just take their word for it, their advice, but we will continue to stick with our program, especially now that our budget deficit is lower than program,” the budget chief said.

“It’s hard to fine-tune in the middle of the game just because the IMF said so because there’s a chance the economy could suffer. You cannot step on the brakes while you’re trying to move forward and when there’s the momentum,” he added.

In the first six-months of the year, the national government incurred a P27.5-billion budget deficit, below the P91.3-billion ceiling for the period.

The lower than target fiscal gap was owing to higher revenues, which exceeded the target by eight percent to P1.41 trillion while expenditures breached the program by two percent to P1.603 trillion.

“We can do it below 3.0 percent and at the same time without sacrificing the BBB [build, build, build program] and the social,” Diokno declared. “We will do it.”

The budget chief is also confident that the national government will surpass its revenue target collation this year.

Last week, the IMF recommended that the Philippine government maintains its budget deficit at 2.4 percent of GDP for 2018 and 2019 to help keep inflationary pressures in check.

But Finance Secretary Carlos G. Dominguez III said that the IMF’s recommendation was a “tough advice” as it could derail the momentum of the massive infrastructure build up.

“The recommendation will be discussed in the DBCC since this requires the collective efforts of its members,” Dominguez said.