Recovery from the pandemic-induced recession will entail not only fast-tracking mass vaccination and sustaining infrastructure development but also some more additional reforms pushed by President Duterte’s economic team on Monday.
Finance Secretary Carlos Dominguez III told the Sulong Pilipinas 2021 virtual forum that earlier reforms put in place by the Duterte administration eased COVID-19’s impact on the Philippine economy, citing that tax reform allowed the government to shore up revenues while rice tariffication slashed prices of the Filipino staple food before the pandemic struck and inflicted the Philippines’ worst post-war recession.
“Amid the extraordinary challenge we continue to face, we will not waver in our commitment to ensure that our macroeconomic fundamentals remain strong. We want to make sure that we can face the future with a deep war chest. We will continue to demonstrate our firm resolve of maintaining fiscal prudence while revitalizing the economy,” Dominguez said.
“We believe that our economic recovery should be patterned after the growth policies our administration put forward from the beginning of our term. Hence, we are maintaining the pace of our ‘Build, Build, Build program’ … With its high multiplier effect, we are expecting the ‘Build, Build, Build’ program to be the main driver of rebuilding the domestic economy,” he added.
The ongoing nationwide vaccination program, meanwhile, will allow the economy to reopen safely and restore livelihoods, Dominguez said. Millions of Filipinos lost their jobs and thousands of businesses closed down amid the longest and most stringent COVID-19 quarantine in the region.
To push forward with economic recovery, Dominguez urged passage of the government financial institutions unified initiatives to distressed enterprises for economic recovery (GUIDE) bill; two pending tax reform packages on property valuation and passive income taxation; as well as amendments to the antiquated public service, foreign investments and retail trade liberalization laws to enjoin more foreign participation.
“We will push for the passage of a bill that will further deepen the domestic capital markets by building a sustainable corporate pension system. We are also supporting reforms to save the military and uniformed personnel pension by making it fiscally sustainable for the long term,” Dominguez said.
Also, Dominguez said they proposed to jack up to a minimum of 75 percent of state-run corporations’ earnings their mandatory dividend remittances to the national government, from 50 percent at present, to collect more revenues while the government eyed to wind down its ballooning debt which was partly a result of massive borrowings to finance COVID-19 response.
Amid calls for additional stimulus such as the Bayanihan 3 bill pending in Congress, Dominguez said they were in discussions with legislators to determine additional revenue sources to finance such off-budget expenditures.
The economic team was also looking at reducing non-essential expenditures to save money and realign them into the prolonged fight against the pandemic.
For his part, Budget Secretary Wendel Avisado pushed for public finance management reforms such as the cash budgeting system, budget modernization bill, and budget and treasury management system.
Socioeconomic Planning Secretary Karl Kendrick Chua also pointed to the 12 priority measures which the Legislative-Executive Development Advisory Council (LEDAC) had agreed to pass by June, including new revenue-generating measures such as amusement tax on digital platforms and licensed cockpits’ offshore betting stations; a tax regime for Philippine Offshore Gaming Operators (POGOs); as well as a measure strengthening local government participation in national development by increasing local government units’ (LGUs) share in national internal revenue taxes.
Avisado said a draft executive order (EO) was pending approval of the Office of the President (OP) “in due time” to devolve some national government functions to LGUs starting next year given the latter’s bigger budget—28-percent larger or equivalent to about P239-billion worth—when the so-called Mandanas ruling gets implemented in 2022.
Chua said they were keeping the 6.5-7.5 percent GDP growth target for 2021 in the meantime, even as he admitted that the actual outturn “may be lower” due to the more stringent lockdowns reimposed in “National Capital Region Plus” which accounted for half of the economy.
For Chua, reopening the economy “at the appropriate time” and with minimum health safeguards in place, as well as timely implementation of the fiscal packages and vaccination program would enable the Philippines’ economic recovery.
