Philippines’ Duterte Proposes 12% Boost in 2017 Budget Spending

  • 2017 budget deficit set to rise to $10.3 billion, 3% of GDP
  • Police budget proposed to increase by 25%, education by 31%

Philippines President Rodrigo Duterte has asked Congress to expand the 2017 budget by 12 percent to $72 billion so he can fulfill key election promises to increase spending on police, education and infrastructure.

According to a plan submitted to the House of Representatives on Monday, the Duterte administration’s budget could widen the deficit to 478.1 billion pesos ($10.3 billion), or 3 percent of GDP, from a projected 2.7 percent this year. This would almost quadruple the 121.7 billion peso deficit recorded in 2015.

In addition to proposing an increase in infrastructure spending to as much as 7 percent of gross domestic product, the Duterte administration is planning a 25 percent increase in the police budget, and a 31 percent increase in spending on education.

Spending allocated to Duterte’s own office in 2017 would increase to 20 billion pesos ($430 million) from 2.86 billion pesos this year to support the Philippines’ hosting of the Association of Southeast Asian Nations summit next year.

‘Golden Age’

Budget Secretary Ben Diokno said Duterte’s 7 trillion peso ($150.5 billion) spending plan was needed to make up for the lack of investment under former president Benigno Aquino and would help define Duterte’s six-year term in office as a “golden age of public infrastructure”.

While Aquino’s tight fiscal reign was credited with winning investment-grade debt ratings and overseeing the fastest economic growth since the 1970’s, some of Duterte’s cabinet members have criticized his predecessor for failing to maintain critical public services.

Along with increased spending, Duterte will ask Congress to approve a tax reform plan that will ensure his government will meet a 10 percent increase in 2017 revenue to 2.48 trillion pesos ($53 billion). Borrowing next year is expected to drop by 9.2 percent, which will help offset the spending increase.

In a speech Saturday, Finance Secretary Carlos Dominguez said economic growth was on target to stay within the 6.5 percent to 7.5 percent forecast. A median estimate of economists surveyed by Bloomberg ahead of the release of new economic data on Thursday said the $292 billion Asian economy grew by 6.6 percent in the second-quarter to June 30.

— With assistance by Clarissa Batino, and Cecilia Yap

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