Economic Journalists Association of the Philippines
August 24, 2017
Thank you for this opportunity to speak before you today, even if this is delivered on videotape. I recall how, early this year, candidates for the French presidential elections appeared simultaneously in several places as holograms. Maybe we will have the technology for that soon.
Let me begin by commending the work of our economic journalists. You have been performing with fairness and competence. Far more than just delivering the bare facts, you have been very helpful in building the financial and economic literacy of our people. Such broad-based literacy is indispensable as we struggle to achieve inclusive growth in a participatory society.
This assembly, I understand, is held to assess the first year of the Duterte administration. This should be a joyful theme.
The first metric that always matters for economic journalists is our growth performance. The Philippine Statistics Authority just reported our second quarter growth rate at 6.5%. That is a good number, coming out of an election year. We are the second fastest growing economy in Asia after China.
We look forward to moving that number even higher in the succeeding quarters. Remittances and investment flows are strong. Our Build, Build, Build program, which will have an expansionary effect on the economy, will begin rolling. Between today and 2022, we expect to invest between eight to nine trillion pesos in modernizing our infrastructural base. This will close the gap between our economy’s logistics backbone and those of the most dynamic economies in our region.
We can no longer postpone investments in infra. For three decades, our economy underspent on infrastructure as we imposed one austerity program afterbanother to climb out of the debt crisis. We have successfully worked down our debt load. Our credit rating improved to investment grade.
We intend to maintain the regime of fiscal discipline even as we are prepared to widen the deficit margin a little more. As a matter of policy, we have set a deficit ceiling of 3% through the length of the Duterte administration even as we escalate public spending to power our economic growth. Much of the first wave of the infra program will be funded through ODAs which offer much lower rates than the best the commercial market offers.
It is important, to be sure, that the tax reform program be passed as soon as possible. Tax reform will give us the fiscal space to pursue the expansionary measures. Without the additional revenues the reform package will bring, we cannot fully pursue the infrastructure program.
There are very real constraints we have to deal with. The rehabilitation of Marawi City will likely cost us P30 billion. The new law mandating free tuition and miscellaneous fees for all public tertiary institutions still has no clear funding mechanism. I assure you we will not compromise on fiscal discipline and court runaway debts to please populist demands.
Package 1 of the Tax Reform for Acceleration and Inclusion (TRAIN) is calculated to produce P157 billion in additional revenues. This represents 0.9% of GDP. Apart from large infra projects, the revenues will be invested in health, education and social protection for our people. In addition, we expect to build road networks and irrigation systems to make our agriculture more efficient.
We have identified 75 major infra projects to be undertaken over the next few years. Of these flagship projects, 18 have been approved by the NEDA board. When the shovels hit the ground, expect an economic growth spurt.
While we are pursuing tax reform, the administration is not relenting on reforming our main revenue agencies. The administrative reforms bore fruit early. The BIR posted a 9.32% increase in collections from January to July against the same period last year. For its part, the Bureau of Customs improved 11.48% in the same period.
The economic program of the Duterte administration is not crafted by elves secluded in dark workshops. It is based on comprehensive and transparent consultations with all stakeholders.
In June 2016, weeks before the new administration was inaugurated, Sulong Pilipinas was held in Davao City. Representing a cross-section of society, Sulong distilled recommendations into 10 “actionable” points. That formed the basis to the administration’s economic program. One year after, the “actionable” points identified have all been substantially complied with.
Earlier this month Sulong Pilipinas 2017 was held to follow through on private sector recommendations. The consultations produced an action agenda that government agencies are now studying closely.
This is how we intend to progress: on the basis of trust and openness. Consultations will be a continuing process. As a rule, the more vulnerable the social sectors are, the more urgent their recommendations will be considered.
The medium term goals remain. Into the medium term, we seek to achieve a sustainable 7% growth target. We plan to bring down poverty incidence to 14% by 2022. We aim to make our economy investment-driven and capable of creating the quality jobs our people expect.
We are happy that one year into this administration’s term, the polls show our people are as optimistic as they have ever been. We take that as a vote of confidence. We treat that as inspiration to work harder and deliver better.
We want to provide the governance our people deserve.
Maraming salamat po.