The budget deficit projected this year to equal 6.1 percent of local output measured as the gross domestic product (GDP) is seen steadily diminishing over five years when it rounds the period to only 3 percent of GDP, the Development Budget Coordination Committee (DBCC) said.
Between 2024 to 2028, the budget shortfall resulting from government spending far more than it generates revenue, was seen falling sharply to only 5.1 percent of GDP next year to 4.1 percent in 2025, 3.5 percent in 2026 then to 3.2 percent of GDP in 2027 and finally to 3 percent of GDP in 2028.
The steady progression from “manageable” budgetary shortfall to a level more in keeping with global norms coincides with a period of accelerated economic expansion averaging 6.5 percent to as high as 8 percent, the inter-agency DBCC said.
Under DBCC programming, revenue flow were to equal 15.7 percent of GDP this year, probably dip to only 15.5 percent of GDP next year but steadily gain momentum beginning 2026 at 16.1 percent of GDP, 16. 5 percent the following year and 16.9 percent by 2028.
Government spending that equaled 21.8 percent of GDP thus far this year were to moderate next year to 20.6 percent of GDP and stabilize at just under 20 percent of GDP from 2024 to 2028.
“Over the medium term, disbursements are expected to remain at an average of 20.0 percent of the GDP between 2024 to 2028. Budget priority will continuously be given to programs and projects that ensure social and economic transformation, in line with the 8-Point Socioeconomic Agenda and the Philippine Development Plan (PDP) 2023-2028. We are also determined to maintain infrastructure at the center of our growth strategy with annual public spending on infrastructure set at 5.0 to 6.0 percent of GDP,” the DBCC said
The DBCC has stubbornly kept its forecast growth this year ranging from six to seven percent although the actual nine-month GDP expansion averaged only 5.5 percent, narrowed next year’s growth path within a 6.5 percent to 7.5 percent range but retained its-five year forecast ranging from 6.5 percent to 8 percent.
The economy grew by 5.9 percent in the third quarter this year, its 10th in a series of quarterly expansions supported by strong government spending and greater investment activities.
The projected growth path was based on inflation averaging well past this year’s target of 2 to 4 percent to 6 percent instead before coming back to within target level over the next five years.
The forecast was based on Dubai crude oil selling from a range of USD82 to USD85 per barrel this year to a range of USD70 to USD90 per barrel next year and finally to a range of USD65 to USD85 per barrel by around 2028.
The local currency the peso was seen ranging from P55.50 up to P56 per USD this year and between P55 to P58 per dollar from 2024 to 2028.
“The peso will continue to be supported by structural foreign exchange inflows, narrower current account deficit projections, and ample foreign exchange reserves,” the BSP said.
“The projected growth for goods imports this year has been revised to -3.0 percent and is expected to increase to 7.0 percent in 2024. On the other hand, the growth of goods exports in 2023 was projected to be -4.0 percent before improving to 5.0 percent next year. For 2024, goods exports growth forecast is supported mainly by the upturn in demand for semiconductors, while goods imports are expected to be propped up by infrastructure investments and increased domestic production capacity.
Meanwhile, for 2025 to 2028, goods exports and imports growth rates are expected to return to their pre-pandemic levels of 6.0 percent and 8.0 percent, respectively, reflecting the anticipated increase in demand and trade activities globally and domestically.”
