Wednesday, July 28, 2021

Macroecon 11, PH budget 2022 initial numbers

The Department of Budget and Management (DBM) released the Budget priorities framework for 2022. No National Expenditure Program (NEP) yet submitted to Congress. 

The appropriations are: P4.1T in 2020, P4.5T in 2021, and proposed P5.0T in 2022. Disbursements/spending are actually understated bec they don't include spending by LGUs from local revenues on top of their IRA share.

Source: DBM, FY 2022 Budget Priorities Framework

The macroeconomic assumptions in making the budget proposal, the first 3 of these 6 assumptions look unrealistic and too optimistic, for 2021:

1. GDP, 6-7%; but we still have contraction in Q1, -4.2%.

2. Inflation, 2-4%; but we already have 4.4% Jan-June.

3. Dubai oil, $50-70/barrel; but Jan-July about $65 already.

When growth is lower, inflation and oil prices are higher, than the macroecon assumptions, very likely the revenue targets will not be met and the deficit, borrowings will be higher.

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