The lowering of Metro Manila’s alert level status would provide a solid, positive impact on the government’s efforts to perk up the local economy, the Department of Finance (DOF) said Thursday, Oct. 14.
Finance Secretary Carlos G. Dominguez III said that downgrading the National Capital Region to Alert Level 3 from the current Alert Level 4 beginning Oct. 16, Saturday, is a welcome development.
While the third-quarter gross domestic product (GDP) is expected to grow at the much slower pace than the 11.8 percent expansion seen in previous quarter, Dominguez is bullish on the country’s final three-month growth performance.
On Wednesday, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases decided to ease restrictions in Metro Manila amid the drop in COVID-19 infections in the metropolis.
“We expect our economy to really start opening up this quarter,” Dominguez said in a Bloomberg TV interview. “We've seen our cases drop, and we're beginning to open up our economy.”
In August, Metro Manila, which accounts for about a third of the country’s economy, was placed under the strictest enhanced community quarantine for two-weeks to curb the spread of the highly transmissible Delta variant.
“Our second quarter GDP grew by over 11 percent, we expect the third quarter to be lower than that because of the spike in the corona Delta variant,” Dominguez said.
Last August, the Development Budget Coordination Committee, an inter-agency body tasked to set the country’s macroeconomic targets, slashed its economic growth outlook for the year to between 4.0 percent and 5.0 percent from 6.0 percent to 7.0 percent.
Asked if the DOF is confident of hitting the downgraded full-year GDP goal, Dominguez said “yes, we're sticking to that growth target and we think we'll hit it. After all, we hit 11.8 percent in the second quarter.”
The Philippine economy needs to grow by at least 4.3 percent in the second half to reach the low-end of the revised target, and by 6.3 percent to achieve the upper-end of the full-year growth.
Meanwhile, Dominguez said the surging oil prices would threaten the government’s inflation target band of 2.0 percent to 4.0 percent should global crude costs hit $90 per barrel.
“We are a bit over target this year, and we've identified the cause and it's the shortage of pork,” Dominguez said. “Now of course we're facing increasing fuel prices, but our estimates are that our inflation target will hold as long as fuel prices stay below $90 per barrel.”
The finance chief also added that the government is looking at holding another offshore borrowing before the end of 2021.
“We are looking at, of course, the three items. We look at always what are the coupon rate... what are the tenors and that is the most important thing now... and of course what is the exchange rate risk,” Dominguez said.
Earlier, the government raised P1.59 billion worth of retail dollar bonds (RDB).
The maiden RDB sale in the domestic market followed the $3 billion global bonds sold in June, $2.5 billion euro-denominated bonds in April, and $500 million yen-denominated “Samurai” bonds in March.
This year, the government plans to borrow P3 trillion to bridge its projected budget deficit.