DOF: Tamed spending due to corruption slowing growth

The Philippine economy might fall short of meeting its full-year growth target, the Department of Finance (DOF) said, as slower revenue collection and dampened government spending continue to weigh on the country’s expansion prospects.

- MARCO LUIS BEECH

Finance Secretary Ralph Recto also revealed that the Philippines was poised to receive a credit rating upgrade from “BBB+” to “A-” from S&P Global Ratings this year, if not for the corruption scandal that erupted over the flood control projects of the Department of Public Works and Highways (DPWH).

Recto noted that several factors could influence the country’s economic performance, as a rebound in private sector confidence and sustained household spending amid easing interest rates could help offset the slowdown.

“We could miss it, 5.5 percent? We hit 5.4 percent,” Recto told reporters after the Senate deliberations on the DOF’s budget.

The Cabinet-level Development Budget Coordination Committee lowered this year’s economic growth target to 5.5 to 6.5 percent from the earlier projection of six to eight percent.

“We reduced the interest rates last week. It will be wind in our sail moving forward. And more rate cuts will be good for the economy. But it all depends on where inflation will be,” Recto added.

The Philippine economy expanded in the second quarter to 5.5 percent, slightly faster than the 5.4 percent recorded in the first quarter of this year.

However, Recto admitted that an economic slowdown would likely rein in due to subdued spending, which could have an impact on overall economic activity.