DBCC keeps growth targets until 2028 despite external headwinds

Economic managers on Thursday retained their growth targets for this year until 2028 despite external headwinds.

The Development Budget Coordination Committee (DBCC), which sets official macroeconomic assumptions and fiscal program, maintained its Philippine gross domestic product (GDP) growth target at 6-7% this year, and at 6.5-7.5% in 2025.

“Despite external headwinds, we are expected to continue surpassing most emerging economies,” Budget Secretary Amenah F. Pangandaman, who heads the DBCC, told the briefing.

“This robust growth momentum is expected to continue over the medium term, with GDP growth reaching 6.5-8% from 2026 to 2028 while considering anticipated domestic and external risks and the latest monetary and trade assumptions of the Bangko Sentral ng Pilipinas (BSP),” she added.

The DBCC also revised the fiscal targets, which Ms. Pangandaman said were “realistic, practical, and adaptive to external and domestic developments.”

Economic managers raised the deficit-to-GDP ceiling for 2025 to 5.3% from 5.2% previously.

The DBCC kept its deficit ceilings for 2026 to 2028, but revised its revenue and expenditure programs.

“The new deficit path will decline more realistically and sustainably, from 5.6% of GDP in 2024 to 3.7% of GDP in 2028, allowing sufficient fiscal space for the government to invest in infrastructure development and other growth-enhancing programs and projects,” the DBM chief said.

Revenue targets were raised to PHP 4.644 trillion (from PHP 4.583 trillion previously) for 2025; to PHP 5.063 trillion (from P4.957 trillion) for 2026; to PHP 5.627 trillion (from PHP 5.487 trillion) for 2027; and to PHP 6.25 trillion (from PHP 6.078 trillion) for 2028.

“On average, revenues are expected to grow by 10.3% every year from 2024 to 2028, reaching PHP 6.25 trillion (16.9% of GDP) by the end of the administration,” Ms. Pangandaman said.

The revised revenue targets will be supported by “enhanced tax administration reforms” and improved collection efficiency, she added.

Finance Undersecretary and Chief Economist Domini S. Velasquez said there is no need to introduce new taxes to meet the revised revenue targets.

“For the rest of the medium term, we actually expect tax revenues to increase…this is largely due to the double-digit increase in the Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC),” she said.

“We’re currently doing a lot of tax efficiency improvements in both the BIR and the BoC. This includes digitalization, regulations to capture e-commerce transactions, and also Customs modernization.”

DBCC also expects expenditures to remain at an average of about 21% of the GDP from 2024 until 2028.

The 2025 spending target was increased to PHP 6.182 trillion (from PHP 6.074 trillion); while spending for 2026 was set at P6.54 trillion (from PHP 6.433 trillion). Expenditures for 2027 were raised to PHP 7.027 trillion (from PHP 6.887 trillion), and for 2028 to PHP 7.621 trillion (from PHP 7.45 trillion).

“We will maintain high investments in infrastructure, which will be between 5% and 6% of GDP from 2024 to 2028. This is expected to create a multiplier effect on the economy, reduce the cost of doing business, support the creation of quality jobs, and ultimately transform the economy,” Ms. Pangandaman said.

The DBCC said it expects the debt-to-GDP ratio to decline from 60.6% this year to 56% in 2028.  The threshold considered by multilateral lenders to be manageable for developing economies is 60%.

Economic managers also expect inflation to settle at 3-4% by end-2024, and return to the 2-4% target range from 2025 to 2028.

Foreign exchange assumptions were adjusted to PHP 56-P58 per US dollar this year from PHP 55-PHP 57 previously. The peso is still expected to stabilize to PHP 65-PHP 85 a dollar from 2025-2028.

The DBCC upgraded its exports growth estimate to 5% for this year from 3% previously. Import growth assumption was lowered to 2% from 4% earlier.

It also revised its Dubai crude oil price assumptions to USD 70-USD 85 per barrel for this year, from USD 70-USD 90 per barrel previously. For 2025 until 2028, the Dubai crude oil assumptions were kept at USD 55-58 a barrel. — B.M.D.Cruz