{"id":19568,"date":"2024-07-03T03:19:51","date_gmt":"2024-07-03T03:19:51","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/philippines-to-post-huge-twin-deficits-this-year\/"},"modified":"2024-07-03T03:19:51","modified_gmt":"2024-07-03T03:19:51","slug":"philippines-to-post-huge-twin-deficits-this-year","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/philippines-to-post-huge-twin-deficits-this-year\/","title":{"rendered":"Philippines to post huge twin deficits this year"},"content":{"rendered":"
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THE PHILIPPINES will continue<\/span> to post large def<\/span>icits for the current account and budget this year due to an expected increase in rice imports and infrastructure spending, Nomura Global Markets Research said.<\/span><\/p>\n

\u201cWe expect the current account deficit (CAD) to remain large and f<\/span>iscal consolidation targets to be challenging this year,\u201d it said in a report.<\/p>\n

\u201cIn our view, prioritization of infrastructure projects under the \u2018Build Better More\u2019 program and a substantial reduction of rice import tariffs will result in the current account deficit remaining large, make f<\/span>iscal consolidation more challenging and could imply persistence in currency weakness.\u201d<\/p>\n

The government is aiming to spend 5-6% of gross domestic product (GDP) on infrastructure annually. The Marcos administration has approved 185 infrastructure f<\/span>lagship projects valued at P9.55 trillion.<\/p>\n

\u201cThe upshot is a still-large CAD, which we forecast at 2.7% of GDP in 2024, well above the pre-pandemic (2016-2019) average of 1.1% and reflecting, in part, rising capital goods and raw materials imports due to infrastructure implementation,\u201d Nomura said.<\/span><\/p>\n

The central bank projects a $4.7-billion current account def<\/span>icit for 2024, equivalent to 1% of GDP.<\/p>\n

The current account deficit stood at $1.7 billion in the first quarter, equivalent to 1.6% of GDP.<\/p>\n

Meanwhile, Nomura also sees the National Government\u2019s (NG) f<\/span>iscal de<\/span>f<\/span>icit<\/span> reaching 5.9% of GDP this year. This is slightly higher than the government\u2019s deficit ceiling of 5.6% of GDP, equivalent to P1.48 trillion.<\/p>\n

Nomura said its higher deficit-to-GDP forecast is due to the Philippine government\u2019s \u201cchallenging\u201d <\/span>f<\/span>iscal targets.<\/span><\/p>\n

\u201cOur recent discussions with off<\/span>icials suggest the risk of a repeat of last year\u2019s underspending is low, thanks to catch-up plans and recent budget reforms,\u201d it added.<\/p>\n

Latest data from the Treasury showed that the NG\u2019s budget de<\/span>f<\/span>icit in the January-May period widened by 24.06% to P404.8 billion.<\/span><\/p>\n

The Budget department last month tasked underspending government agencies to submit \u201ccatch-up plans\u201d to address low budget utilization.<\/p>\n

Meanwhile, Nomura said that the recent reduction in rice import tari<\/span>f<\/span>fs will also contribute to the twin de<\/span>f<\/span>icits.<\/span><\/p>\n

\u201cFood importation will remain a recourse of the government to increase domestic supply amid continued weather-related risks and now likely higher rice import demand due to lower tari<\/span>f<\/span>fs,\u201d it said.<\/span><\/p>\n

President Ferdinand R. Marcos,<\/span> Jr. last month signed Executive Order No. 62, which slashed tarif<\/span>fs on rice imports to 15% from 35% previously, until 2028.<\/p>\n

The Department of Agriculture expects rice imports to hit 3.9 million metric tons (MMT) this year, while the US Department of Agriculture expects imports to reach 4.6 MMT.<\/p>\n

\u201cThe tariff cut also implies some forgone fiscal revenues of about 0.05% of GDP, by our estimates,\u201d Nomura said.<\/p>\n

The Finance department earlier estimated that foregone revenues from the tarif<\/span>f cut could reach up to P22 billion.<\/p>\n

Due to the tarif<\/span>f cut, Nomura also cut its inflation forecast to 2.8% this year from 3.7% previously. The BSP expects full-year inf<\/span>lation to settle at 3.3%.<\/p>\n

The government\u2019s efforts to ramp up infrastructure spending as well as the recent tarif<\/span>f cut may also lead to \u201cpersistent foreign exchange (FX) weakness.\u201d<\/p>\n

\u201cRelatively large twin def<\/span>icits under BSP\u2019s flexible market-determined FX regime could imply persistence in currency weakness,\u201d it added.<\/p>\n

The peso closed at P58.795 against the dollar on Tuesday, weakening by 14.5 centavos from its P58.65 f<\/span>inish on Monday.<\/p>\n

The peso has been trading at the P58-per-dollar level since May. \u2014 Luisa Maria Jacinta C. Jocson<\/b><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THE PHILIPPINES will continue to post large deficits for the current account and budget this year due to an expected increase in rice imports and infrastructure spending, Nomura Global Markets Research said. \u201cWe expect the current account deficit (CAD) to remain large and fiscal consolidation targets to be challenging this year,\u201d it said in a [\u2026]<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[14644,18603,10146,1572,6616,745,8397,1369],"class_list":["post-19568","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-bworldonline","tag-deficits","tag-huge","tag-philippines","tag-post","tag-this","tag-twin","tag-year"],"yoast_head":"\nPhilippines to post huge twin deficits this year - Energy Buzz<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/energybuzz.ph\/philippines-to-post-huge-twin-deficits-this-year\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Philippines to post huge twin deficits this year - 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