The government, under the Marcos administration, will no longer borrow as much as it did at the peak of the pandemic crisis, when it was forced to tap various sources to fund its coronavirus pandemic response measures.
“Our fiscal consolidation strategy will bring down our debt-to-gross domestic product (GDP) ratio from the current 63.5 percent to less than 60 percent by 2025. It will cut the deficit-to-GDP ratio from the current 6.4 percent to 3 percent by 2028,” Finance Secretary Benjamin Diokno said at yesterday’s Post-SONA (State of the Nation Address) Economic Briefing.
“The implication is clear. We do not have to borrow as much as we did during the crisis years. And at the same time, we will continue to boost domestic economic activity with our massive infrastructure investments at 5 to 6 percent of GDP annually,” he added.
The Duterte administration had to secure more financing in 2020 and 2021 to support the government’s measures to address the coronavirus disease 2019 (COVID-19) pandemic crisis.
The tight lockdowns during the earlier part of the pandemic led to a significant reduction in economic activity and mobility which, in turn, resulted in less tax revenues that could be tapped to fund these measures.
“The economic team is committed to implementing a medium-term fiscal framework. This serves as our blueprint to reduce fiscal deficit, promote fiscal sustainability and enable robust economic growth,” Diokno said.
“The framework proposes measures that will improve tax administration, enhance the fairness and efficiency of our tax system, and promote environmental sustainability to address climate change. In addition, we will work for the passage of the remaining tax reform package of the Duterte administration,” he added.
In his speech, Diokno said the Marcos administration will implement a comprehensive eight-point near- and medium-term socioeconomic agenda to decisively respond to risks and steer the economy back to its high-growth trajectory.
“While our economic growth continues to be robust, the operating environment remains uncertain and difficult, with many challenges that must be addressed. Inflation is expected to remain elevated for as long as prices of oil and other key commodities remain high. The effects of the pandemic linger while the global political economy remains unpredictable. But the Philippines is fully prepared to address the challenges ahead,” Diokno said.
“In the near-term, the plan seeks to address the immediate challenges confronting the Filipino people: rising prices, scarring from the COVID-19 pandemic and ensuring sound macroeconomic fundamentals,” he added.
“Over the medium-term, the goal is to create more jobs, not just any other jobs, but quality jobs and green jobs. We will achieve this goal through higher investments in infrastructure, human capital development and digitalization. These interventions will enable us to cut the poverty incidence to 9 percent by 2028 and elevate the country to upper middle-income status. We will do all of this while exercising fiscal discipline,” Diokno also said.
Over the near-term, the eight-point socioeconomic agenda includes ensuring food security, reducing transport and logistic cost, reducing energy cost, tackling health, strengthening social protection, addressing learning losses, improving bureaucratic efficiency and ensuring sound fiscal management.
Meanwhile, the medium-term eight-point socioeconomic agenda includes promoting investments, improving infrastructure, ensuring energy security, increasing employability, expanding digital infrastructure, encouraging research and development and innovation, pursuing a green and blue economy, and establishing livable and sustainable communities.
In the same event, Socioeconomic Planning Secretary Arsenio Balisacan said the Philippines may be able to achieve upper middle income class status by 2024.
“At the rate we are growing, and assuming that we will achieve the 6.5 to 7.5 percent growth this year, and the 6.5 to 8 percent next year, we should be reaching that minimum of $4,250 (per capita income) in 2024, then we will become a member of the so-called upper middle-income class,” Balisacan said.
“That will mean that the size of the economic pie will be bigger. And that will mean that… the size of the government revenues will be much bigger. And so we have more resources for providing public services and social protection, among other needs,” he added.
Balisacan also said the National Economic and Development Authority will deliver the Philippine Development Plan as instructed by the President before the end of this year and will ensure that the President will receive periodic reports on its implementation.
