By Tracy Cabrera
ASEAN+3 Macroeconomic Research Office chief economist Hoe Ee Khor (Photo: AMRO Asia)
MANILA — As the Marcos administration’s Development Budget Coordination Committee (DBCC) targets to bring the country’s financial deficit down to 3.0 percent of its gross domestic product (GDP) by 2028, finance secretary Benjamin Diokno expressed confidence that the local economy will continue to expand the current year and bring speedy recovery through sound fiscal policies.
According to the former governor of the Bangko Sentral ng Pilipinas (BSP), this projection is consistent with analyst consensus that predicts the Philippine economy posting the highest growth rate in the ASEAN+3 region composed of member states if the Association of Southeast Asian Nations plus Japan, China, and South Korea.
Diokno noted that despite the challenging global economic conditions, the ASEAN+3 Macroeconomic Research Office (AMRO) revised upwards its 2022 GDP growth projection for the Philippines from 6.5 percent to 6.9 percent, citing the reopening of the economy, domestic consumption, and infrastructure investment as key drivers of economic growth in the country.
“We’re very optimistic about the Philippines . . . 6.9 percent is among the highest growth rates in the (ASEAN+3) region,” AMRO Chief Economist Hoe Ee Khor pointed out during a virtual press briefing that described the positive development based on its July quarterly update of the ASEAN+3 Regional Economic Outlook (AREO) Report.
For 2023, AMRO kept its growth forecast for the Philippines at 6.5 percent, similar to Vietnam’s growth rate and the highest in the region, and at the 182nd Development Budget Coordination Committee (DBCC) Meeting last July 8, the country’s economic managers adjusted Philippines GDP growth rate assumption for the year from 7 to 8 percent to 6.5 to 7.5 percent, following recent domestic trends and reflecting challenges from external developments.
Diokno explained that the slight narrowing of the target for 2022 was due to the rising oil and commodity prices brought about by the ongoing Russia-Ukraine conflict.
Despite this though, the finance chief added there is so much to be hopeful about as the new Marcos administration has set its sights on boosting the economy through sound policies in governance.
“We should be happy. Be optimistic. That’s still the best among ASEAN+3, not only this year but also next year. That’s the consensus of forecasters,” Diokno enthused.
In his foresight, he cited that as economic activity is expected to continuously pick up over the medium-term, the DBCC projects revenues to increase from 15.2 percent of GDP in 2022 to 17.6 percent of GDP in 2028, and tax efforts to improve from 14.5 percent of GDP in 2022 to 17.1 percent of GDP in 2028.
Meanwhile, he added that disbursements from 2022 to 2028 will be maintained above 20 percent of the GDP.
“There’s really nothing to worry about. The way out of this is by growing at a faster rate. We simply outgrow our debt,” he explained while giving assurances that the same trend of ballooning deficits can be observed in both developed and emerging economies.
“Government will continue to pursue a Medium-Term Fiscal Framework (MTFF) that aims to reduce the fiscal deficit, promote fiscal sustainability and enable robust economic growth, and the broad-based growth strategy on which the framework is anchored also contains ‘fair and efficient’ tax measures where all Filipinos contribute their fair share and will cover areas where tax laws and administrative policies need to catch up, such as on digital services,” he said.
Aside from improved tax administration, Diokno likewise shared that the government will be looking into pursuing the previous administration’s remaining tax reform packages on improving real property valuation and simplifying financial taxation as well as further enhancing public-private partnership (PPP) arrangements in the national and local levels to ease the pressure on the country’s fiscal space.
“The MTFF will help achieve the commitment of President Ferdinand ‘Bongbong’ Marcos, Jr. to bring down poverty incidence to a single-digit level by the end of his term in 2028,” the finance chief concluded. (ai/mtvn)