Luncheon for former DOF secretaries/ senior officials
It is a pleasure seeing all of you again for this annual luncheon for the former secretaries and senior officials of the Department of Finance.
As far as I know, the DOF is the only agency that has institutionalized a meeting like this one. This underscores the exemplary continuity in the policies of the Department. It also is an opportunity for the agency to continue tapping the wisdom and insight of our predecessors. This has always served the Department very well.
Today, I am happy to announce that Standard and Poor’s raised our credit rating to BBB plus—the highest sovereign rating we have ever achieved. This signals strong international confidence in our fiscal management. The upgrade puts the Philippines above countries like Italy, Portugal and Indonesia and just a notch below countries like Spain and Malaysia. This puts us at par with countries like Mexico, Peru and Thailand.
The credit rating upgrade is an undeniable recognition of President Duterte’s unwavering commitment to bold reforms and sound economic policies as embodied in the 10-point socioeconomic agenda of the administration as well as his strong political will to get these tough initiatives done at the soonest possible time.
It is also a tribute to the hard work put in over the years by our predecessors–please give them a big hand–and the men and women who continue to work for this Department. By the way, this morning, we just recognized several of the members of the Department who have spent 20, 25, 35 years and of course, leading the whole pack is Undersecretary Gil Beltran. It’s guys like him who have put this department to where it is today.
The results of the last three years of this administration have clearly demonstrated our resolve and success. Last year, 99 percent of Filipino taxpayers brought home a total of 111 billion pesos because of the reduction in the personal income tax rates. This is roughly equivalent of a 14th month pay. That reflected in a spike in consumer demand that helped boost domestic economic activity. In fact, when I go over the results for 2018 of the publicly listed companies in the retail business, I think the average increase in their sales and profits is between 17 and 25 percent. In fact, one company, I think it was Wilcon, increased their profits 35 percent last year. And I guess this is because of the good demand.
Moreover, the first year of the TRAIN Law’s implementation resulted in a 108 percent achievement of our revenue target. For that, we have to thank Billy. (Dulay) Of course, Jagger (Guerrero) and his predecessor for the great work they’ve done in implementing the new tax reform law and increasing our revenues. We credit the excise taxes, the administrative reforms in our revenue agencies and the plain hard work of our personnel for this success.
Even as we substantially increase the government’s spending outlay to support the infrastructure modernization program and improvement of social services, I assure you of our continuing commitment to fiscal discipline. We will continue working down our debt service even as we empower progressive governance with our recurrent revenues.
We are going to have a meeting this afternoon with the Cabinet, and I’m going to report this increase in credit ratings, but I’m going to emphasize that it’s not only the support for the initiatives and the tax reform that helped us there, but also what the President vetoed–it’s just as important to our getting the credit rating.
We are also particularly proud of the passage early this year of the rice tariffication law. This was, understandably a politically difficult reform measure to pass. This was finally achieved under the current administration after more than thirty years of attempting to do so under various administrations. I tried the first time in 1988 and I failed. So I told them this time, I’m not going to fail. So we got it done.
The TRAIN Law and the rice tariffication law are such game-changing reforms—-more so the other landmark initiatives this government has decisively undertaken such as the establishment of the Bangsamoro Autonomous Region for Muslim Mindanao; increasing investments in infrastructure modernization; the introduction of a national ID system; improvements in ease of doing business; and massive commitments to strengthening our human capital and the passage of a law providing universal healthcare.
The next few years will be even more crucial, as we hope to build on these government’s achievements and realize a truly inclusive and progressive economy. This year, we expect the legislation of the remaining components of the comprehensive tax reform program. The positive results of the TRAIN law provide the best arguments for completing the tax reform. We will again seek your wisdom and support to triumph over the political challenges.
We will continue with our fast and sure approach in securing concessional financing support for our Build, Build, Build projects. We are confident, as more and more projects become shovel-ready, the immense multiplier effects of infrastructure investments will provide a strong stimulus to our economic expansion.
The hard work done by this Department and this government, and also the previous administrations, in building a strong fiscal position and honing the bureaucracy to the task of catalyzing high and inclusive growth is among the key factors that have elevated the Philippines to the club of the world’s fastest growing economies and, soon, to the ranks of upper middle-income countries.
While the achievements mentioned are certainly encouraging, we will not allow ourselves to become complacent. Even more work is needed to ensure that we reap the benefits of such accomplishments and continue to institute and implement meaningful reforms – not just to get that sterling “A” rating, but more importantly, to achieve a more comfortable life for all law-abiding Filipinos.
Again, I must thank you for the good work all of you have put in the past to build the inclusive economy we aspire for our people. That makes our present efforts more doable.
Let me raise my glass and propose a toast to both the good work of the predecessors and to the great goals this Department will achieve over the next months and years.