Manila: The Philippine government can boost spending in the remaining months of the year, the finance minister said on Friday, suggesting economic activity could pick up after the first-quarter slowdown.
A fall in exports and weak public spending, due to a 2014 scandal surrounding a stimulus fund and bureaucracy, pushed first quarter growth in Southeast Asia’s fifth largest economy to 5.2 per cent, the lowest level in three years.
“We have a chance to catch up in the last quarters of the year especially given there is no fiscal constraint,” Finance Secretary Cesar Purisima told Reuters in an interview.
The Philippines has enough fiscal space to increase spending with revenues growing at a double digit pace, said Purisima, an accountant by training.
Manila’s efforts to collect more revenue by waging a campaign against tax evasion and corruption helped raise its tax-to-GDP ratio to 13.6 per cent in 2014 from 12.1 per cent in 2010 when President Benigno Aquino assumed power.
Purisima said government spending could quicken once reforms, aimed at making public finances more transparent and efficient, take root.
“The reforms process is continuing. These are big institutions. We want to make sure we spend the money on the right projects and at the right cost,” Purisima said. “Clearly, in some agencies it is starting to show.” The Philippines remains one of the fastest growing economies in Asia and has a strong external payments position. It was upgraded to two notches above investment grade by Standard and Poor’s and Moody’s Investor Service last year.
The government, which is seeking to cut its dependence on foreign borrowing by pursuing debt buy-backs and swaps, will continue to be on the “lookout for opportunities” to lengthen its debt maturities and cut down borrowing costs, Purisima said.
It plans to conduct a peso-denominated bond swap this year but the timing and size have yet to be finalised.
In January the Philippines sold $2 billion worth of $25-year US dollar bonds with the lowest coupon ever. It was part of part of a swap to better manage its debt load.
