RE-ENACTING the 2018 national budget for next year will not only slow down economic growth as government spending gets reduced, but will also lead to job losses and push hundreds of thousands to poverty.
Department of Budget and Management (DBM) estimates showed that expenditure in 2019 will be cut by a total of 219.8 billion pesos (Bt136.6 billion) if a re-enacted budget is spent instead of passing the proposed 3.757-trillion-peso (Bt2.34-trillion) cash-based appropriations. In particular, disbursements for personnel services will be reduced by 54.4 billion pesos; maintenance and other operating expenses by 14.3 billion pesos; subsidies by 28.3 billion pesos; and capital outlays by 122.9 billion pesos.
Based on estimates of the state planning agency National Economic and Development Authority (NEDA), this reduction in government spending would result into lower gross domestic product (GDP) growth, such that economic expansion would be 1.1-2.3 percentage points below the lower end of the 2019 target range of 7-8 per cent.
According to NEDA, GDP growth would only be 4.7-5.9 per cent next year if the national government operates under a re-enacted budget.
In turn, slower economic growth falling behind 6 per cent would lead to job losses as well as many Filipinos becoming poor.
“It is estimated that employment could be reduced by as much as 600,000 if the budget is re-enacted in 2019. Among the sectors to be affected are the following: construction, public administration and defence, wholesale and retail trade, land transport, and education,” a document obtained by finance beat reporters on Monday read.
As such, “it is estimated that 200,000-400,000 individuals will be pushed into poverty as a result of contraction [in budget],” it added.