The country’s finance chief estimates the economy expanded by at least seven percent in the first quarter of the year.
“My guess is at least seven percent,” Finance Secretary Benjamin Diokno told reporters in a press briefing late Friday when asked about his gross domestic product (GDP) growth rate projection for the first three months of 2023.
The government is scheduled to announce the first quarter growth figures this Thursday.Diokno’s estimate is slower than the 8.2 percent expansion recorded in the same three-month period in 2022.
The said projection for the first quarter, however, is at the higher end of the Development Budget Coordination Committee’s (DBCC) growth assumption for the year of six to seven percent.
During its April meeting, the DBCC maintained its economic growth targets at six to seven percent for 2023 and 6.5 to eight percent for 2024 to 2028, even as it took into consideration the risks posed by geopolitical and trade tensions, possible global economic slowdown as well as weather disturbances in the country.
National Economic and Development Authority Secretary Arsenio Balisacan said during the DBCC briefing many of the sectors in the economy have not even recovered yet to pre-pandemic levels, thus there is scope for growth despite the external headwinds.
In the same press briefing last Friday, Diokno mentioned that he will be in a meeting today with Defense Secretary Carlito Galvez Jr., Interior and Local Government Secretary Benhur Abalos, and representatives from the Office of President and the Department of Budget and Management to fine-tune the proposed military and uniformed personnel (MUP) pension reform and address the current issues of all involved.
“The current system as formulated is simply not fiscally sustainable. We are determined to come up with a reasonable proposal in consultation with the concerned agencies and stakeholders,” Diokno said.
Diokno said a 2019 actuarial study by the Government Service Insurance System (GSIS) estimates that the government must spend P848.39 billion annually for the next 20 years to finance the current pension system.
“The Bureau of the Treasury estimates that the level of total unfunded pension liabilities is P9.6 trillion. This is around half of GDP in 2022. Further, considering that the current pension system is fully funded by the national government, the accumulating pension liabilities will likely increase public debt by as much as 25 percent by 2030,” the finance chief said.
As of 2022, the average monthly pension of retired MUP is around P40,000. Compared to other pension systems, this amount is 8.8 times higher than the average pension of a pensioner under the Social Security System (SSS) and 2.9 times higher than the average pension under the GSIS, Diokno said.
“If we do not address the huge and rising unfunded liabilities of the current MUP pension system now, securing sufficient resources to provide for the benefits of future pensioners and their dependents will be extremely challenging,” he added.
Diokno said a unified separation, retirement and pension system for the MUP is proposed in place of piecemeal reforms.
“This means that the real solution should apply to those in the active service and new entrants, and members across all MUP agencies,” Diokno said.
“Recognizing the unique hazards and risks that MUPs assume in the performance of their duties, the current proposal significantly increases the disability pensions on top of their other benefits,” he added.
In the same press conference, Diokno also discussed the planned merger of the Development Bank of the Philippines (DBP) and Land Bank of the Philippines (Landbank).
“Our indicative timeline is as follows: Following the approval of the GCG (Governance Commission on GOCCs), we now await the issuance of an executive order sometime this month. There will be a joint crafting and approval of the operational integration plan in September, followed by the approval of the Monetary Board in October, before the final legal merger between Landbank and DBP by November,” Diokno said.
The merger is estimated to generate up to P975 million in savings per year through the consolidation of branch operations, on top of the expected reductions in personnel expenses, he added.
“On the retrenchments resulting from the merger, we are determined to work closely with the two banks to ensure that personnel decisions are consistent with our objective to enhance the bank’s efficiency and effectiveness. It is important that those who will be separated receive a fair package of benefits in recognition of their valuable service to the government,” Diokno said.
Diokno reiterated that there is no need for a new law to proceed with the merger.
“The Supreme Court has upheld the constitutionality of the GCG Law, which provides for the powers of the GCG to merge GOCCs (government-owned and -controlled corporations) with charters,” he said.
