The government is doing good in terms of fiscal spending toward robust economic growth, according to a Moody’s Investors Service analyst.
“Right now we are still underspending. But at the same time if you look at the fiscal impulse and how growth has actually has been aided by fiscal spending in the past, some of the criticisms are unbounded because the government is doing what it can,” Christian de Guzman, senior analyst and vice president for Moody’s Sovereign Ratings Group, told reporters on Monday.
The Philippine economy exceeded market and government expectations as it grew 7.8 percent in the first quarter of 2013, the highest among the economies in the Association of Southeast Asian Nations as well as China.
The growth was attributed to the increased consumer and government spending, which was shored up by increased investments in construction and durable equipment that contributed to the highest quarterly gross domestic product growth since the second quarter of 2010.
As of April this year, government spending for infrastructure and other capital outlays surged to P75.2 billion, or an increment of 44.8 percent year-on-year.
Meanwhile, first-half fiscal deficit reaches P51.3 billion and remains contained below the programmed deficit of P84.7 billion for 2013.
Furthermore, de Guzman said that since 2011—where underspending dragged down the country’s growth—the Philippine economic performance has been quite good.
“The performance has been quite good in terms of getting some those projects up and coming and they’ve been very successful,” he said.
However, he said that most of the big-ticket projects in the country today has something to do with the private sector’s willingness to engage in those projects.
De Guzman is leading the team from Moody’s that will conduct a weeklong examination of the Philippine economy. Last week, Moody’s announced that the country was placed under review for a possible credit upgrade.
The Philippines has Ba1 rating from Moody’s, one notch below the investment grade rating.
Mayvelin U. Caraballo