(Bloomberg) -- The Philippine economy will probably expand around 6% in 2019 as the government ramps up spending after a slower growth rate in the first half.
“We’re hitting our spending targets now and we definitely will make a very good effort in catching up,” Finance Secretary Carlos Dominguez said in an interview with Bloomberg Television’s Kathleen Hays at the sidelines of the International Monetary Fund meetings in Washington.
The government’s so-called spending catch-up plan will act as a “fiscal stimulus” for the economy, Dominguez said. The Philippines has a 6%-7% GDP growth target for the year and posted a 5.5% expansion in the first half.
The Transport and Public Works agencies have called for 24-hour construction on infrastructure projects and broken big-ticket deals into smaller contracts so they can be bid out faster. Lawmakers have also agreed to extend the validity of any unused funds to 2020 to make up for the four-month delay in the approval of this year’s national budget, the Finance chief said.
The Philippines is lining up a record $27-billion borrowing plan for next year on expectations that the government’s spending program, particularly for major infrastructure deals, will get back on track. It will keep its program to raise as much as $3.7 billion offshore, despite seeing “higher than expected” interest rates in the market because of the U.S.-China trade war uncertainty, Dominguez said.
The Southeast Asian nation could offer dollar bonds around January or February, followed by yuan- and euro-denominated debt papers, and then a Samurai offer toward August, he said. No new offshore markets are being considered.
While some countries test budget-deficit limits to shield their economies from a possible global recession, the Philippines faces a problem of being unable to spend the money it has.
The spending comes as the Philippines faces more headwinds with the U.S.-China trade war. Electronic shipments to China, where they are packaged for the U.S. market, have pulled down export growth, he said. Foreign direct investments have also fallen 39% as of July.
“Definitely the trade war has increased the uncertainties in the market,” Dominguez said. “Although the Philippines is well-positioned, we are still feeling ill effects of the trade war.”
(Updates throughout with more comments from the interview.)
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