The proposed FY 2022 National Budget continues to provide fiscal support to COVID-19 response, as well as, the need for more robust economic recovery. Large pandemic-induced shocks have resulted to large negative output gaps, reflecting weak demand and high labor unemployment. Additional spending should be calibrated to the size of the output gap, and to focus on expenditure items, such as laboratory systems and vaccination, to address key downside risks to growth.
The paper also tackled concerns of fiscal sustainability, providing qualitative and quantitative metrics to show still ample fiscal space for additional spending. Lastly, current revenue performance is still below pre-pandemic level, and strengthening domestic resource mobilization is needed to support higher government spending, and help manage the fiscal deficit and national debt.