There is policy discord among policy craftsmen, with one side urging the other to heighten public spending or risk slowing the year’s output growth to as low as only 1.5 percent instead of 4.1 percent maximum.

Monetary officials said on Friday the fiscal sector is too reluctant to spend its way out of the decelerating economy and complement the central bank’s P500-billion liquidity injection program pursued since December last year.

While Finance Secretary Margarito Teves already has a P330-billion fiscal-stimulus package handed down to him by Congress, monetary officials said a significant chunk of funds that was earlier seen to be frontloaded in the first few months was withheld instead.

According to officials, the government should “accept the slack in private-sector investments and start spending its way out of the [global] recession.”

“The BSP [Bangko Sentral ng Pilipinas] can only do so much in lowering its policy rates,” officials said.

It was noted that while P361.9 billion should have been spent in the first three months, actual disbursement was P16.4 billion lower.

This was hardly magnified spending consistent with front-loading expenditures in the opening months, in the minds of monetary officials.

Officials said it was “wrong to demonstrate extreme fiscal discipline in a situation where public spending was necessary.”

According to officials, borrowing should not be so bad at this time when public debt as a percent of the gross domestic product (GDP) trended down the past six or seven years.

From as wide as 5 percent of GDP, the debt load had been tracked to more or less 1 percent of GDP, creating fiscal space for Secretary Teves to maneuver.

“The stimulus package to us is not that critical. What is critical is the act of spending so that the private sector will also be confident,” officials said.

Whenever governments spend, economic activities get a boost and the productive sectors are able to invest and produce, officials explained.

In this sense, the Executive branch is not doing its job well as purveyors of growth, as it seems wedded to the notion that spending beyond the budget is bad, according to officials.

As for monetary policy, this can only do so much and is certainly ineffective when pursued independent of fiscal objectives, the officials said.

As the policy rates of the BSP move closer to zero—as they are in the United States at the moment, for example—the choice of monetary-policy levels promoting growth and price stability become increasingly difficult to come by, officials said