Finance Secretary Benjamin E. Diokno has showcased the strengths of the Philippine economy and the Marcos Jr. administration’s concerted efforts in propelling rapid growth through the full implementation of business-friendly reforms during his closing remarks at BizNewsAsia’s 22nd Anniversary on November 25, 2023.
According to the Finance Secretary, the Philippines is in a position of strength as evidenced by its third quarter gross domestic product (GDP) growth of 5.9 percent—the strongest in the region.
This strong performance is also supported by the World Bank (WB), which expects the Philippine economy to surpass its East Asia and Pacific peers in 2023 at 5.6 percent.
Meanwhile, the ASEAN+3 Macroeconomic Research Office (AMRO) projects the Philippines to post the highest growth in Southeast Asia both in 2023 and 2024 at 5.9 and 6.5 percent, respectively.
“So we have many reasons to believe that we will achieve the lower end of our growth target of 6.0 to 7.0 percent for this year, and even faster at 6.5 to 8.0 percent from 2024 to 2028,” Secretary Diokno said.
According to the Finance Chief, the country’s gross international reserves (GIR) as of end-October 2023 of USD 101.1 billion, which is equivalent to 7.5 months’ worth of import cover, is well above the International Monetary Fund’s (IMF) Assessing Reserve Adequacy (ARA) metric at 1.9 in 2023.
The ratio of the Philippines’ GIR relative to the IMF’s ARA metric is remarkably higher than China’s 0.7 as well as Malaysia and Indonesia both at 1.1.
He further noted that since the global financial crisis, the ratio of the country’s GIR relative to the said metric has been consistently higher than selected Asian and emerging market economies.
“Having adequate reserves could reduce the likelihood of a balance of payment crisis, help preserve economic and financial stability against pressures on the exchange rates, and create space for fiscal autonomy,” Secretary Diokno said.
Moreover, the Philippine peso continues to be supported by structural foreign exchange inflows and ample international reserves. The year-to-date average peso-dollar exchange reached PHP 55.64, well within the assumption for 2023 of PHP 54 to 57.
Furthermore, the National Government (NG) debt-to-GDP ratio as of end-September 2023 stood at 60.2 percent, lower than the Medium-Term Fiscal Framework (MTFF) target of 61.2 percent for 2023, indicating that the country is on track to achieving its medium-term fiscal targets.
Credit rating agencies have also released favorable assessments for the Philippines, amid downgrades in other economies globally.
Just this month, Fitch Ratings affirmed the Philippines’ triple-B rating with a Stable outlook, while in August 2023, R&I affirmed the country’s triple-B plus rating and revised its outlook from stable to positive.
In addition, the country’s strong growth performance is further supported by higher revenue collections, easing inflation, and continuous improvements in the jobs market.
To sustain and improve on these positive developments, the Marcos, Jr. administration is all hands on deck in implementing and introducing structural measures that strengthen the country’s fiscal position and business-friendly reforms that open up the economy to more meaningful investments.
The Philippine government has already made great progress on this front and has liberalized many sectors through amendments to the Public Service Act, Retail Trade Liberalization Act, Foreign Investments Act, as well as the Renewable Energy Act Implementing Rules and Regulations (IRR).
With the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act in place, the government was able to reform the Philippines’ corporate tax structure and fiscal incentives system to support strategically important industries.
“The Philippines will be on an aggressive building mode in the next two decades, to drive and sustain rapid growth,” Secretary Diokno said.
To support the Marcos, Jr. administration’s ambitious Build Better More program, the government pushed for improvements to the public-private partnership (PPP) framework and the timely passage of the PPP Code, which will pave the way for impactful, high-quality, and bankable infrastructure projects.
Under this massive infrastructure program, the government has prioritized 197 flagship projects with a total investment requirement of about PHP 8.7 trillion. A total of 100 projects are already ongoing or approved for implementation.
The big-ticket infrastructure projects focus on unlocking greater economic productivity through physical and digital connectivity, health, power and energy, agriculture, flood management, water supply, and irrigation.
Since the beginning of President Marcos, Jr.’s term, the government has already approved six PPP proposals, two of which were evaluated in record time.
The solicited proposal for the Ninoy Aquino International Airport was evaluated and approved in only six weeks, while the unsolicited proposal for the Tarlac-Pangasinan-La Union Expressway Extension Project went through a rigorous evaluation process and secured approval in just 11 weeks.
“As we approach the end of the year and gear up for 2024 and beyond, the Philippine government is confident and more than ready to take the economy to greater heights,” Secretary Diokno said.
