Thursday, 8 January 2015 01:57
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MANILA (Reuters): Just days into 2015, the Philippine Government gave up its goal to grow by more than 8% next year, saying it had to be “prudent” in setting targets given challenges the country faces.
Budget Secretary Florencio Abad said on Wednesday the government has cut 2016’s growth target to 7-8% from the original 7.5-8.5%.
The Philippines is leaving intact its goal to grow this year by 7-8%, which would keep it as one of Asia’s fastest-expanding economies.
The trim of next year’s target came at a cabinet-level committee’s review of the medium-term targets for administration of President Benigno Aquino, due to end in June 2016.
Abad told reporters that looking at the global and domestic challenges, it was prudent to set the annual growth target at 7-8% “up to the end of this administration”.
Manila is on course to miss its 6.5-7.5% growth target for 2014, as the economy lost some steam in the third quarter, due in part to slower-than-expected government spending.
Growth in 2014 will likely be 6-7%, Abad said. There was 7.2% expansion in 2013.
Government spending has slowed since a Supreme Court decision in July declared aspects of an economic stimulus fund illegal. That has cause public officials, wary about accusations of recklessness, to subject decisions to more scrutiny, crimping public investment. In November, the Government posted its fourth monthly budget surplus in 2014, boding ill for an economy banking on infrastructure investments to boost growth.
“We do have challenges that we need to deal with, some beyond our control,” Abad said. As examples, he cited the dramatic decrease in oil prices. which impacts tax collection and “the continuing difficulty of getting key spending agencies to disburse and spend according to programme.”
Central Bank Governor Amando Tetangco said on Tuesday there was no immediate need for further stimulus, although manageable inflation prospects give authorities room to “support” economic growth.
On Wednesday, the government committee also set its long-term outlook for the exchange rate of the peso at 42-45 to the dollar for 2015 to 2018.
