Philippine Finance Executives Predict Stronger Second-Half 2023 Growth

Philippine Department of Finance (DOF) Secretary Benjamin Diokno and other financial executives anticipate a surge in the country's economic growth during the latter half of 2023.

After posting a 4.2 percent growth rate in the second quarter of the year, the Philippines has achieved a year-to-date growth of 5.3 percent. To meet its annual target, the government aims for growth to settle between 6 to 7 percent for the entirety of 2023.

During a weekly press chat, Secretary Diokno expressed his optimism, aligning his outlook with that of the International Monetary Fund (IMF), which also expects a more rapid economic expansion in the second half of the year.

Diokno highlighted historical patterns, noting that the fourth quarter, characterized by dry weather, typically witnesses a surge in infrastructure projects. These projects play a significant role in stimulating economic activity.

To expedite the economic recovery and boost growth, the government has placed its faith in the accelerated execution of programs and projects, including enhanced delivery of public services, as outlined in the 2023 national budget.

In line with this approach, government agencies have been instructed to present their respective catch-up plans to increase government spending, which fell below targets in the first half of the year.

Finance Undersecretary Zeno Ronald Abenoja explained, "In the discussions with the line agencies, they outlined different issues that they have encountered, and the catch-up plans that they devised were precisely to address these issues. What they are showing is that with the implementation of these catch-up plans, there will be a significant improvement in the disbursement rate by the end of the year."

While uncertainties persist, Abenoja emphasized that there is a notable improvement trajectory from the performance seen in the first half of the year.

In terms of fiscal performance, the national government recorded a cumulative budget deficit of PHP 551.7 billion during the first half of the year, marking an 18.17 percent reduction from last year's PHP 674.2 billion. This first-half budget gap also stands 28.49 percent below the PHP 771.5 billion mid-year deficit program.

Spending during the period amounted to PHP 2.4 trillion, slightly below the PHP 2.58 trillion programmed for the first half of the year.

Abenoja highlighted that several issues have affected project implementation, such as procurement processes and documentation requirements. He emphasized that the better design of procurement terms and enhanced engagement with prospective bidders are key areas of focus for overcoming these challenges.

Based on the catch-up plans submitted by agencies, most projects are slated for completion within the remaining months of 2023, ensuring their accelerated implementation in the second half of the year.