In preparation for the President’s submission of the proposed FY 2022 National Budget to Congress, the Development Budget Coordination Committee (DBCC) reviewed the country’s macroeconomic assumptions, growth objectives, and fiscal program for FYs 2021 to 2024.
Real Growth Projections
Amid the declining number of COVID-19 cases in the country since the peak in April 2021 and the gradual reopening of the economy with more targeted granular lockdowns, the DBCC reaffirmed the Gross Domestic Product (GDP) growth target of 6.0 to 7.0 percent in 2021, 7.0 to 9.0 percent in 2022, and 6.0 to 7.0 percent in 2023 and 2024.
The proposed 2022 national budget will continue to invest in building the country’s resilience amidst the pandemic by prioritizing funding for COVID-19 response measures, such as healthcare development and social services.
The intensified implementation of the prevent, detect, isolate, treat, and recover (PDITR) strategy, along with the full vaccination of residents in high-risk areas, will help build consumer and business confidence, and improve our health system capacity and prevent community transmissions of the Delta variant.
With these actions, the DBCC is optimistic that the country’s GDP may return to its pre-pandemic levels as early as 2022.
Based on the most recent incoming evidence, the DBCC authorized changes to certain macroeconomic assumptions.
Following the projected rebound in external demand, the forecast for this year’s increase in goods exports was raised from 8.0 percent to 10.0 percent. Meanwhile, the estimate for growth in services exports in 2022 has been raised from 6.0 percent to 7.0 percent, in line with expected increases in travel and BPO receipts as the economy gradually reopens.
Other macroeconomic assumptions stated during the 179th DBCC meeting were maintained.
Medium-Term Fiscal Program
The Philippines revenue and disbursements for the medium-term were retained at PhP2.88 trillion for 2021, PhP3.29 trillion for 2022 and PhP4.0 trillion for 2024. Disbursements have been adjusted downwards to PhP5.02 trillion (20.7 percent of GDP) in 2023 due to revised projections for the National Tax Allotment.
The infrastructure program disbursement for 2022 is projected to increase to PhP1.29 trillion, equivalent to 5.8 percent of GDP. Over the medium-term, the deficit path will be on a downward trajectory with 7.5 percent in 2022, 5.9 percent in 2023, and 4.9 per cent in 2024.
FY 2022 National Expenditure Program
The proposed 2022 national budget will continue to invest in building the country’s resilience amidst the pandemic by prioritizing funding for COVID-19 response measures, such as healthcare development and social services. It will also ramp up economic growth through investments in public infrastructure. The DBCC approved the expenditure ceiling of the FY 2022 National Expenditure Program at PhP5.024 trillion.