The Philippines Plans a Government Spending Spree 

(Bloomberg) -- The Philippines targets to speed up state spending growth to about 15 percent in the months ahead after a contraction in the first quarter due to a budget delay, a senior budget official said.

“We’re confident the implementation of the catch-up plan will help boost growth,” Budget Assistant Secretary Rolando Toledo, 55, said in an interview on Thursday. Government agencies must submit revised monthly spending plans including “shovel ready” projects as the department maps out an accelerated disbursement program, he said.

Toledo, who has worked for three decades at the budget agency, said he sees year-on-year spending growth of at least “mid teens” once the plan is in place. State spending, excluding interest payments, fell 1 percent in the first three months of 2019.

Subsidies for the poor and salary hikes will likely fuel the increase in outlays starting this month after President Rodrigo Duterte signed the 2019 budget law only in April, Toledo said. That could help counter the impact of the spending ban on projects ahead of the May 13 legislative elections. Allocations for new infrastructure will help boost disbursement in the third quarter, he said.

Economic Boost

A slowing global economy and risk of heightened trade tension are forcing many Asian nations to look for domestic sources of growth. In the Philippines, that could mean either ramping up state outlays or cutting the key interest rate as soon as next week.

The budget delay likely cut first quarter gross domestic product growth by as much as one percentage point, prompting a reduction to this year’s growth target band by a point to 6 percent to 7 percent. The government will announce last quarter’s growth on May 9.

The budget department will submit a 4.1-trillion pesos ($79 billion) spending proposal for 2020 to Congress as early as July, Toledo said. The budget bill will include provisions for universal health care and the expansion of the autonomous region in the nation’s Muslim-majority south.

©2019 Bloomberg L.P.