MANILA, Philippines - The International Monetary Fund on Friday said it lowered its full-year economic growth forecast for the Philippines.
The IMF expects the Philippine economy to grow by 6.2 percent this year, slower than its earlier forecast of 6.5 percent, IMF Resident Representative Shanaka Jayanath Peiris said.
The IMF's projection is below the government's 6.5 percent to 7.5 percent target for 2014.
"In the Philippines, one of the key things for a 6.2 percent growth… is that it’s predicated on the fiscal spending of the government... We’re expecting a recovery in spending… We are basically assuming the government’s fiscal plan goes according to plan," Peiris said.
Data from the Department of Finance showed the government posted a P8.5-billion surplus in the January to May period. This was a reversal of the P13.2-billion deficit during the same period last year.
"The imprint on May spending slowed down a bit but we’re expecting that to reverse… We are assuming that they will catch up on spending and we are expecting it to reach their 2-percent deficit target by year end," the IMF representative said, referring to the government's budget deficit target of P266.2 billion this year.
The Aquino administration is currently embroiled in controversy over the P144-billion stimulus package, Disbursement Acceleration Program (DAP).
Asked how this would impact growth, Peiris said if this leads to a slowdown in government spending, "there is a risk to growth."
"But we’re assuming there would be a catch-up, that they can meet their targets… In theory, there’s a budget there and it’s there to be executed. Just because the DAP can’t be (implemented) doesn’t mean you can’t hit the targets."
The IMF still forecasts 6.5 percent growth for the Philippine economy in 2015, as it sees a recovery in export markets and increase in investments.