First Economic Development Group meeting focuses on growth and inflation

The Economic Development Group (EDG) held its first principals-level meeting on May 17, 2023 at the Department of Finance (DOF) in Manila to harmonize, coordinate, complement, and synergize government efforts, with particular focus on mitigating inflation and fostering inclusive and sustained growth.

The EDG, chaired by Finance Secretary Benjamin E. Diokno and co-chaired by National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan, provides recommendations and policy advice on government programs, projects, and policies, among others.

The EDG aims to:

  • Promote an environment conducive to the growth and competitiveness of private enterprises, which will lead to the creation of jobs that will empower and provide Filipinos with opportunities to rise above poverty;
  • Improve farms and rural enterprises vital to achieving food security and more equitable economic growth;
  • Undertake research and development that are relevant to and supportive of the requirements of micro-, small- and medium-scale enterprises and of national industries;
  • Improve national productivity and competitiveness of domestic products and services; and
  • Ensure deep and wide distribution of economic opportunities and benefits to the Filipino people.

Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman, Department of Trade and Industry (DTI) Secretary Alfredo E. Pascual, Department of Labor and Employment (DOLE) Secretary Bienvenido Laguesma, Department of Energy (DOE) Secretary Raphael P.M. Lotilla, and Department of Transportation (DOTr) Secretary Jamie Bautista were in attendance.

Senior officials from the Department of Agriculture (DA), Department of Information and Communications Technology (DICT), Department of Public Works and Highways (DPWH), Department of the Interior and Local Government (DILG), Department of Science and Technology (DOST), and Presidential Management Staff (PMS) also shared inputs during the meeting.

Updates on inflation mitigating measures

DOF Undersecretary and Chief Economic Counselor Zeno R. Abenoja presented updates from the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) on food inflation and non-food inflation, led by NEDA and DOF, respectively.

Among the proposed short-term measures to mitigate food inflation is strengthening the implementation of biosecurity and hog repopulation programs through continuous monitoring of the African swine fever (ASF) and implementation of the Integrated National Swine Production Initiatives for Recovery and Expansion (INSPIRE).

In the medium-term, the goal is to boost the productivity and resiliency of the agriculture sector by promoting private investment in facilities, transport, and logistics systems to bring safe and nutritious food closer to consumers.

Critical reforms such as the Livestock, Poultry, and Dairy (LPD) Competitiveness and Development Act, as well as amending Section 61 of the Fisheries Code, will be pushed.

On non-food inflation, the government will continue to pursue energy conservation and efficiency programs, promote responsible water consumption, and support vulnerable sectors

The second IAC-IMO sub-committee on non-food inflation is scheduled to meet on May 18, 2023.

On policy responses to El Niño

NEDA Director Nieva T. Natural mentioned that the transition to El Niño is expected to occur in the next months with an over 90 percent chance of persisting up to the first quarter of 2024. Specifically, food security could be affected by this phenomenon.

Given this scenario, NEDA proposed preparatory activities, such as early planting for the dry season in water deficit areas, weekly monitoring/updating of local field conditions, and buffer stocking of agricultural inputs, among others.

The creation of the El Niño Team, as instructed by the President, will lead the government’s response to the forthcoming phenomenon.

NEDA said that with the projected weak to moderate El Niño, they do not expect a significant reduction in local production, especially for rice and corn, that would lead to surges in food prices.

On the status of infrastructure projects

NEDA Assistant Secretary Roderick M. Planta reported the status of the 194 Infrastructure Flagship Projects (IFPs) under the Build, Better, More program that were approved by the NEDA Board on March 9, 2023.

The IFPs, with a total investment of PHP8.2 trillion, includes 14 projects in Agriculture, 5 projects in Digital connectivity, 6 projects in Health, 119 projects in Physical connectivity, one project in Power and energy, 44 projects in Water Resources, and 5 projects in Other infrastructure.

As of May 9, 2023, there are 68 ongoing projects, 25 for implementation, 9 for approval, 52 under project preparation, and 40 under pre-project preparation.

The IFPs will primarily be funded through official development assistance (ODA) amounting to PHP4.5 trillion, public-private partnerships (PPPs) at PHP2.5 trillion, and general appropriations at PHP850 billion.

On monitoring systems

DBM Division Chief Salvacion Axalan presented on the development of a high frequency monitoring system for priority budget items, as well as for agriculture.

For inflation monitoring, the DBM will collaborate with the DA for the creation of an agricultural monitoring dashboard.

For the monitoring of infrastructure programs and projects, DPWH Undersecretary Maria Catalina Cabral shared the Department’s lifecycle suite of digital-based tools for civil works projects and contracts. These were developed by the DPWH to effectively manage and monitor all infrastructure projects and ensure the optimal use of funds.

Meanwhile, the DOTr uses web-based dynamic maps and dashboards to 1) monitor affected properties and the status of right-of-way (ROW) acquisition; and 2) monitor the project alignment and progress of construction works.

On addressing the impact of the global economic slowdown

DOF Undersecretary Abenoja discussed the external outlook of the Philippines and reported that the Development Budget Coordination Committee (DBCC) maintained its growth assumption at 6.0 to 7.0 percent for 2023 and 6.5 to 8.0 percent for 2024 to 2028 in its latest meeting in April 2023.

As of the first quarter of the year, the Philippine economy has maintained its momentum despite high inflation, reaching a real GDP growth of 6.4 percent. Undersecretary Abenoja further reported that on a quarterly year-on-year basis, exports and imports declined by 13.2 percent and 3.3 percent, respectively, both mainly attributable to electronic products.

DTI Assistant Director Bianca Sykimte also presented some key interventions to help address the domestic impact of the slowdown and uncertainty in global economic growth.

To boost demand, the government will increase accessibility to markets and support for local industries and start-ups, improve the investment climate, promote free trade, and enforce standards to ensure product quality in the markets.

To capture demand, the government will accelerate investments in areas that provide for basic necessities, contribute to modernization, and generate higher value products.