MANILA -- The Philippines is seeking a 170 billion pesos ($3.6 billion) pandemic stimulus program to boost its economic recovery this year, officials said on Tuesday, as they temper growth targets following disappointing first-quarter results.
President Rodrigo Duterte's economic team now expects gross domestic product to expand by 6% to 7% in 2021, slightly lower than the previous target of between 6.5% and 7.5%, as the country wrestles with new COVID-19 variants.
The new stimulus measure, which is now being deliberated in congress, will support "those hardest hit by the pandemic as well as fund improved health protocols," according to the Development Budget Coordination Committee, which reviews macro-economic assumptions.
Finance Secretary Carlos Dominguez, who heads Duterte's economic team, said the stimulus would be funded through the realignment of different agencies' existing budgets, as well as from additional dividends paid out by state-owned corporations.
"We want this program to be revenue-neutral. As you see, our projected fiscal deficit has already increased from 8.9% to 9.4%," Dominguez said during an online press conference. "It's really getting to be very concerning."
"President [Duterte] has already requested the different agencies to identify projects that can be postponed," Dominguez said.
The Philippines' new target requires around 10% expansion in the next three quarters, which the government hopes to achieve via improved pandemic response measures, such as digitally assisted contact tracing and accelerated vaccinations.
In comparison, the Asian Development Bank projects a less optimistic recovery of 4.5% expansion for the Philippines this year, after a record 9.6% shrinkage last year.
The scaled-down economic outlook comes after the country's economy contracted by a worse-than-expected rate of 4.2% in the January to March period, extending its recession to a fifth straight quarter.
The reduction reflects the impact of the emergence of new COVID variants, which partly drove the surge of infections last month, forcing the imposition of a lockdown in Metro Manila and four nearby provinces. Lockdown measures were eased this week, but "heightened restrictions" remain in place.
The government, meanwhile, expects growth to accelerate next year.
"GDP is projected to return to pre-COVID-19 levels by growing at 7% to 9% in 2022, and will continue to grow by 6% to 7% in 2023 and 2024," the committee said in a joint statement read out by Budget Secretary Wendel Avisado.
The new growth outlook for 2022 is also lower than the previous 8% to 10% target. The ADB, meanwhile, expects the Philippines to grow by a more modest 5.5% in 2022.