July 18, 2019

We, the members of the Development Budget Coordination Committee (DBCC), held our 176th meeting today, to revisit the government’s macroeconomic assumptions, medium-term fiscal program, and growth targets in time for the submission of the 2020 President’s Budget.

Macroeconomic Assumptions 

In view of recent domestic and external developments, we adopted the following macroeconomic assumptions:

The inflation rate assumption for 2019 is revised downward to the range of 2.7 to 3.5%, due to the government’s decisive steps to stabilize the general price level. These include the full implementation of Presidential directives issued last year to increase the food supply and the passage of the Rice Liberalization Act, which opened up the rice sector and helped bring rice prices down. Meanwhile, the inflation assumption for 2020 to 2022 is retained at 2.0 to 4.0%.

The assumption for the USD price of Dubai crude oil per barrel for 2019 to 2022 is retained between USD 60-75 per barrel.

On the exchange rate, the PhP-USD exchange rate assumption is adjusted to PhP 51 to 53 against the USD for 2019 and calibrated at PhP 51 to 55 from 2020 to 2022, projecting the possible appreciation of the peso with easing inflation pressures and positive market sentiment with the recent sovereign credit rating upgrade of the Philippines.

Assumptions in goods exports growth were set at 2.0% in 2019, due to slower global growth, and maintained at 6.0% from 2020 to 2022. Likewise, goods imports growth projections were lowered to 7.0% in 2019, and maintained at 8.0% from 2020 to 2022.

Services exports growth assumptions were set at 9.0% from 2019 to 2022, while services imports growth were fixed at 3.0% in 2019, 4.0% in 2020, and 5.0% in 2021 and 2022.

Medium-Term Fiscal Program and Growth Targets 

Revenue collections are projected to reach PhP3.15 trillion in 2019, equivalent to 16.4% of Gross Domestic Product (GDP). Meanwhile, disbursements are targeted to hit PhP3.77 trillion in 2019, which is equivalent to 19.6% of GDP.

For 2020, revenues are projected to increase to PhP3.54 trillion, equivalent to 16.7% of GDP, while disbursements are programmed at PhP4.21 trillion or 19.9% of GDP. Revenue and disbursement projections are estimated to rise to PhP4.42 trillion (17.2% of GDP) and PhP5.24 trillion (20.4% of GDP), respectively, by 2022.

The comprehensive tax reform program can help ensure a reliable revenue base and, more importantly, enhance the modernization of our economy. Completing the passage of the remaining tranches of the tax reform will ensure a steady revenue flow and equitable sharing of contributions for the government’s social and infrastructure programs while securing fiscal stability long into the future.

Given the revenue and disbursement program adopted by the DBCC, the deficit target will be maintained at 3.2% of GDP from 2019 to 2022 to sustain the government’s investments on infrastructure and human capital development.

Accounting for the aforementioned factors, the GDP growth target is maintained at 6.0 to 7.0% in 2019, 6.5 to 7.5% in 2020, and 7.0 to 8.0% in 2021 and 2022.

2020 National Expenditure Program 

In view of the government’s development targets and fiscal priorities, we have crafted a proposed budget of PhP4.1 trillion in 2020, 12.0% higher than last year and equivalent to 19.4% of GDP. This responds to the needs and captures the aspirations of the Filipino people. We commit to fulfilling our Constitutional duty to submit this proposed budget within 30 days of the opening of Congress.

The proposed 2020 National Budget will continue to invest in public infrastructure and social services, while funding the priority programs of the Duterte administration such as the Bangsamoro Organic Law, the Universal Healthcare Law, the institutionalization of the Pantawid Pamilyang Pilipino Program (4Ps), among other measures to promote economic and human capital development.

We remain steadfast in our commitment to build a more dynamic and competitive economy, one that will provide jobs to our workers, improve the living conditions of the poor, and create more opportunities for all law-abiding Filipinos.