The Philippine government lowered its forecast for economic growth this year because of concerns that the economy’s ability to recover from the pandemic will be hampered by rising inflation and soaring debt.
Benjamin E. Diokno, the secretary of finance, stated on Wednesday that the goal now is for this year’s gross domestic product (GDP) to grow by 6.5 to 7.5 percent.
This is faster than the 5.7 percent GDP growth in 2021 but slightly less than the 7-8 percent target set by the Development Budget Coordination Committee (DBCC).
Additionally, the government increased the DBCC’s 6-7 percent goal for 2023 to 2025 to a 6.5-8 percent GDP target for the period of 2023 to 2028.
Mr. Diokno stated at a Palace briefing that “this is the highest growth rate among all ASEAN+3 countries this year and next year.”
On Friday, the DBCC will examine the economic presumptions.
The new goals, according to Mr. Diokno, are a part of the 2023–2028 medium-term fiscal framework that the first Cabinet meeting on Tuesday approved.
For the following six years, “this framework will set the tone and serve as our game plan,” he said. “We have higher goals.”
By the end of President Ferdinand R. Marcos Jr.’s term in 2028, the government hopes to reduce the poverty rate to 9%, according to Mr. Diokno.
Due to the pandemic, the Duterte administration’s initial goal of reducing the poverty rate to 13 to 15 percent by 2022 was revised to 15 to 17 percent. The poverty rate was 24.7% as of the first semester of 2022.
The director of finance stated that by 2025, the debt-to-GDP ratio would be 60 percent. The ratio exceeded the 60 percent mark that multilateral lenders deem appropriate for developing economies at the end of the first quarter of 2022, standing at 63.5 percent.
Mr. Diokno stated, “We want to demonstrate to the world that we are conscious of practicing good fiscal management.
The government also aims to reduce the deficit-to-GDP ratio to 3% starting in 2026, he continued.
He continued, “We still have a lot of financial room, and we are confident that revenues will increase.
The infrastructure program started by Mr. Marcos’ predecessor is anticipated to continue under him.
From 2023 to 2028, the government is committed to investing 5 to 6 percent of GDP in infrastructure, according to Mr. Diokno, who also mentioned that it would pursue public-private partnerships.
Although Mr. Diokno predicted that the Philippines would likely reach upper middle-income status by the end of Mr. Marcos’ administration, the country is still working toward this goal.
The coronavirus pandemic has delayed the Philippines’ initial goal of moving up to the upper middle-income status by 2022.
The World Bank established the income range for the upper middle-income bracket as $4,096 to $12,695 in capital as of last year.
TAXES
According to Mr. Diokno, the Marcos administration would work to see that the Comprehensive Tax Reform Program of the Duterte administration was completed (CTRP).
There are still two revenue-neutral packages available. We’ll push for that because these will greatly simplify the tax system, he said. “We anticipate them being authorized before year’s end.”
The remaining CTRP packages, which aim to standardize real property valuation and assessment and simplify taxes on passive income, were not approved by the previous Congress.
Former central bank governor Mr. Diokno agreed that taxes on digital services are appropriate and that they are “only fair.”
Mr. Diokno also discussed the prospect of levying a tax on single-use plastics in a separate interview with the ABS-CBN News Channel.
“I believe that we should consider some actions that we can take to reduce pollution on the tax side. For illustration, he suggested taxing single-use plastics.
“The Philippines is probably one of the most climate change vulnerable countries, so it is in our own interest to support the climate change movement.”
The nation’s P12.5 trillion debt could be paid off through measures included in the fiscal consolidation plan that was first put forth by former Finance Secretary Carlos G. Dominguez III.
The first package of the fiscal consolidation plan includes a P20 excise tax per kilogram of single-use plastics. — Diego and Kyle Aristophere T. Atienza Roberts, Gabriel C.
