The Bangko Sentral ng Pilipinas's rate cuts totalling 1.5 percentage points since December need to be backed by more government spending to drive private sector consumption and support growth, a BSP official said.

BSP Deputy Governor Diwa Guinigundo told reporters on Sunday that further easing of policy rates would not be enough to stimulate the economy. The government has set a growth target of 3.1 to 4.1 percent this year, lower than last year's 4.6 percent expansion.

The central bank will review its rates policy on Thursday, the same day first quarter growth data is announced. The key overnight borrowing rate is now at a 17-year low of 4.5 percent.

'Risk aversion is still very strong,' Guinigundo said. 'You lower policy rates, you reduce reserve requirement to boost liquidity in the system precisely to avoid any tight credit situation. But because of risk aversion, your loan officers will continue to tighten credit standards.'

'It's not possible to bring down policy rates all the time. Fiscal and monetary policies should be complementary,' he said.

The economy will likely expand just 1.5-2 percent this year, below the government's target, if Manila continues to put a cap on spending despite a promise to spend more, said a senior government official, who asked not to be named.

The government said last week the economy likely grew 1.8-2.8 percent in first quarter from a year ago, supported by modest growth in the services sector.

The government spent P355 billion ($7.5 billion) in the first quarter, below target expenditures of P361.9 billion for the period. Its spending in April of P108.7 billion slowed from P128.6 billion in March, government data showed.