Recto sees deficit-GDP ratio at 6.2% in ’24
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THE WORLD | A10
ISRAELI STRIKES KILL 492 IN LEBANON’S DEADLIEST DAY OF CONFLICT SINCE 2006
INANCE Secretary Ralph G. Recto expressed optimism the national government’s budget deficit, measured against the gross domestic product (GDP), will improve to 6.2 percent in 2024. “Very confident we will achieve that this year,” Recto said during a press briefing at Malacañan Palace on Tuesday. Recto said the government is hitting its revenue and expenditure targets, which will bring down the deficit-to-GDP to 5.6 to 5.7 percent this year. By 2024, Recto expects the deficit-to-GDP to be 5.6 percent or P1.568 trillion, or 5.7 percent (P1.596 trillion) of the P28-trillion economy.
The national government’s fiscal deficit stood at 4.87 percent of GDP in the first half of 2024, slightly higher than the 4.80-percent ratio recorded in the same period in 2023. This comes after the economy grew by 6.3 percent at a fasterthan-expected pace in the second quarter of 2024. Earl ier, t he BusinessMirror reported that the increased deficit-to-GDP ratio could potentially drive up interest rates due to government spending outpacing revenue collections. (See: https:// businessmirror.com. ph/2024/08/12/high-deficitto-gdp-ratio-may-prompt-interest-rate-increase/)
As of the end of July 2024, the government’s budget shortfall expanded by 7.21 percent to P642.8 billion from the P599.5 billion posted in the same period a year ago. State spending reached P3.250 trillion in the seven-month period outpacing the P2.607 trillion in revenues generated by the government. However, the 4.9-percent deficit-to-GDP ratio is lower than the Cabinet-level Development Budget Coordination Committee (DBCC) deficit ceiling for 2024 at 5.6 percent. The DBCC estimates that deficitto-GDP ratio will drop to 5.35 percent in 2025 and decrease further to
4.73 percent in 2026, 4.13 percent in 2027, and 3.72 percent in 2028.
RRR cut to drive economic growth
IN the same briefing, Recto said the Bangko Sentral ng Pilipinas’s (BSP) decision to cut the reserve requirement ratio (RRR) of banks will be “good” for the economy. “It will improve the capital markets. We’re injecting roughly P380 billion into the system, it will be good for banks,” Recto said. Recto said the RRR cut has a more immediate effect than the key policy rate cut in growing the economy. See “GDP,” A2
A broader look at today’s business
BSP SEEN TO DELIVER 50-BPS RATE CUT IN Q4 www.businessmirror.com.ph
n Wednesday, September 25, 2024 Vol. 19 No. 344
P25.00 nationwide | 2 sections 24 pages | 7 DAYS A WEEK
By Samuel P. Medenilla @sam_medenilla
& Cai U. Ordinario
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@caiordinario
HE expected decline in commodity prices could prompt the Bangko Sentral ng Pilipinas (BSP) to implement an additional 50-basis-point (bps) reduction in key policy rates in the last quarter of the year. In a press briefing in Malacañang on Tuesday, Department of Finance (DOF) Secretary Ralph G. Recto, the administration representative in the Monetary Board (MB), disclosed he is optimistic there will be a rate cut because of the continuous decline in prices of basic goods and services. This is also consistent with the expectation of analysts who believe the recent decision of the United States Federal Reserve to reduce policy rates by 50 bps is also a factor that the BSP will consider in the succeeding policy rate settings of the Monetary Board. “Definitely, I did make a statement a few days ago, the Fed [Unit-
ed States Federal Board] reduced by 50 bps or half a percent, so I think we can achieve half a percent,” Recto said in a press briefing in Malacañang. Recto said inflation is expected to ease to 2.5 percent this month from 3.3 percent last August. However, some uptick is expected in the run up to the Christmas season. Inflation is expected to average around 3.1 percent to 3.9 percent due to robust consumption spending during the holidays. Inflation is also forecasted to trend lower to around 2.9 percent to 3.1 percent next year. See “BSP,” A2
GROWTH GOALS MAY BE HURT BY WEAK REMITTANCE, EXPORTS
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OWER Overseas Filipino remittances and weak export demand could reduce the country’s chances of meeting its economic growth targets this year, according to analysts. Capital Economics said the country’s GDP may only post a growth of 5.1 percent this year and 5.5 percent next year. It’s only in 2026 when the economy is expected to post faster growth of 6.5 percent. The market analyst said the lower interest rate environment
and the slowdown in inflation may not be enough to boost the country’s growth. “[Low interest rates and slow inflation are] likely to be offset by slower growth in remittances and weaker export demand. Fiscal policy is also likely to hold back growth. The government is aiming to reduce government debt, which shot up during the pandemic, to more sustainable levels,” Capital Economics said. See “Remittance,” A2
EXITING FROM ‘NEET’ Tesda Director General Kiko Benitez, US Ambassador MaryKay Carlson, McDonald’s Philippines President and CEO Kenneth Yang, PBEd Chairman Ramon del Rosario Jr., Hannibal Camva, Chief of Party for YouthWorks PH, and Edelberto de Jesus, PBEd Board Adviser, attend the graduation ceremony at McDonald’s Sucat San Antonio branch in Parañaque City for 53 former out-of-school and unemployed youth who completed the work-based training program provided by YouthWorks PH in partnership with McDonald’s Philippines. YouthWorks PH is an $8.7-million, eight-year (2018-2026) private sector-led initiative for youth employability, a collaboration between the US Agency for International Development (USAID) and the Philippine Business for Education (PBEd). Through this program, McDonald’s Philippines offers free skills training to 5,000 youth aged 18 to 30 who are not in education, employment, or training (NEET). McDonald’s has committed to hire those who meet its hiring standards. NONIE REYES
With 126 projects worth ₧4T, BOI wants Green Lane law By Andrea E. San Juan @andreasanjuan
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HERE are now 126 projects approved under the green lane, amounting to P4.1 trillion, according to the Board of Investments (BOI). BOI Managing Head Ceferino S. Rodolfo revealed this at the Senate hearing for the proposed budget of the Department of Trade and Industry (DTI), the parent agency of the BOI, as he revealed BOI’s intent to work on having the Green Lane institutionalized by law. “Those who have registered under the green lane have reached P4.1 trillion [worth of projects] as of September 23,” Rodolfo said.
Data obtained by the BusinessMirror from the BOI indicated that of the 126 projects approved, 114 are in the Renewable Energy Sector with a project cost of P3.747 trillion; 6 projects are in the Digital Infrastructure, P346.329 billion; 4 projects are in the Food security sector, P4.14 billion; and 2 projects in the Manufacturing sector, P29.607 billion. T he investment promotion agency attached to DTI told this paper that the 11 new projects approved in September under the green lane are all under the Renewable Energy sector. The green lanes for strategic See “BOI,” A2
PESO EXCHANGE RATES n US 55.7950 n JAPAN 0.3886 n UK 74.4863 n HK 7.1654 n CHINA 7.9114 n SINGAPORE 43.2318 n AUSTRALIA 38.1470 n EU 62.0106 n KOREA 0.0418 n SAUDI ARABIA 14.8708 Source:
BSP (24 September 2024)