DOMESTIC EXPENDITURE during the electoral phase and provincial investments once the prohibition on funding for specific infrastructure initiatives is lifted are predicted to mitigate the impacts of elevated US tariffs on Philippine economic advancement.
“We anticipate that the repercussions of US tariffs can be balanced by electoral expenditure activities and the removal of the ban on certain public infrastructure post-elections,” Budget Secretary Amenah F. Pangandaman conveyed to BusinessWorld via a Viber message last week.
Ms. Pangandaman, who leads the Development Budget Coordination Committee (DBCC), indicated that government investment spending is anticipated to increase in the forthcoming quarters.
The Commission on Elections’ 45-day prohibition on public works expenditures commenced on March 28 and concluded with the elections on May 12.
The Philippine economy expanded at a slower pace than anticipated in the first quarter with a rate of 5.4%, down from 5.9% the previous year, which fell short of the government’s 6-8% target for the year.
The deceleration was partly ascribed to increased uncertainty stemming from US President Donald J. Trump’s reciprocal tariffs announced in April. The higher tariffs, including a 17% duty on Philippine exports, were paused for 90 days pending discussions.
Ms. Pangandaman foresees that expenditure linked to elections will enhance economic growth following the 18.7% increase in state expenditures as organizations hastened spending before the election ban.
Department of Economy, Planning, and Development Undersecretary Rosemarie G. Edillon indicated that public expenditure might stabilize in the second quarter since it was subject to the ban in April and some of May.
Ms. Pangandaman mentioned that disbursements are likely to increase towards the end of May to June after the prohibition on elections ends.
Nonetheless, analysts cautioned that the increase might be fleeting.
Spending linked to elections might only deliver a “temporary” uplift, stated John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.
“This might partially counteract the negative effects from external pressures such as the US tariffs, particularly if government entities accelerate infrastructure projects and political campaigns maintain elevated levels of economic activity,” he remarked in a Viber message on Sunday.
He expressed that the momentum from electoral spending may not suffice to sustain growth beyond the second quarter if export-driven sectors experience downturns or investments diminish.
The gains are “temporary,” while increased tariffs could lead to longer-lasting structural impacts such as diminished export competitiveness, alterations in supply chains, and investor trepidation, he added.
Philippine export growth slowed to 6.2% in the last quarter, down from 8.1% the previous year, as enterprises remained wary regarding trade.
Reinielle Matt M. Erece, an economist at Oikonomia Research and Advisory, Inc., stated that depending on government expenditure to promote growth is unsustainable and may deplete the national budget, leading to increased borrowing.
He urged the government to seek trade agreements and enhance the investment environment instead.
Trade Secretary Maria Cristina A. Roque, Special Assistant to the President for Investment and Economic Affairs Frederick D. Go, and Philippine Ambassador to the US Jose Manuel D. Romualdez met with US Trade Representative (USTR) Jamieson Greer in Washington on May 2 to discuss tariffs.
Ms. Roque previously mentioned that the meeting “went exceedingly well,” adding that they look forward to more discussions.
Ms. Pangandaman stated they would persist in overseeing agencies’ budget utilization rates, with catch-up strategies for postponed programs prioritized after the elections. — Aubrey Rose A. Inosante
