Recto to press members: Partner with us in communicating the complete picture of PH’s promising economic story

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Finance Secretary Ralph G. Recto has urged the members of the press to partner with the Department of Finance (DOF) in communicating to the public, in understandable terms, the complete picture of the Philippines’ promising economic story and the reasons behind the government’s optimism.

“The DOF’s task of maintaining fiscal stability often involves wading through complex statistics and jargon and making decisions that might not always be popular. But that is only because the public fails to fully appreciate the rationale and long-term gains of doing them,” he said in his speech at the Manila Overseas Press Club (MOPC) Finance Night on March 20, 2024 at the Fairmont Hotel in Makati.

“Thus, the DOF counts on your expertise to convey, in comprehensible terms, the strategies and initiatives we are implementing to establish strong foundations for sustained long-term growth,” he added.

The Finance Chief highlighted that while the global economic outlook remains dim due to geopolitical tensions and other added external pressures, the Philippines remains a bright spot in the region.

This claim is supported by multilateral organizations that expect the Philippines to remain a frontrunner in ASEAN with a projected gross domestic product (GDP) growth of 5.8% to 6.3% in 2024.

Furthermore, international research organizations project that the Philippines will join the ranks of the world’s top 20 largest economies by mid-century.

Specifically, Goldman Sachs forecasts the Philippines to be the 14th largest economy globally by 2075.

“Asia’s economic powerhouses, particularly the Philippines, are set to lead growth over the next decades,” Secretary Recto said.

He said the Marcos, Jr. administration is determined to achieve or even surpass these forecasts via a set of growth-enhancing strategies: 1) continue bolstering macroeconomic strength through prudent fiscal management, 2) direct accelerated spending program towards infrastructure and human capital development, and 3) implement game-changing reforms that will drive investment-led growth benefitting all Filipinos.

On bolstering macroeconomic strength, Secretary Recto said the government is currently reviewing the Medium-Term Fiscal Framework (MTFF) to ensure that fiscal targets reflect realities globally and domestically and that growth-enhancing fiscal consolidation is pursued.

On inflation, he said the government will keep it manageable and within the government’s target band of 2 percent to 4 percent through the Reduce Emerging Inflation Now (REIN) plan.

In the immediate term, the plan involves proactively preparing the country to mitigate the effects of El Niño on inflation through strengthening agricultural production to ensure food security.

To fund the increasing needs of the Filipino people, the DOF will focus on growing revenues further by plugging tax leaks, improving tax administration—a process that will take some time, and preventing wasteful expenditures.

Alongside these initiatives, five tax reform measures are underway to improve revenue mobilization, further sharpen our fiscal toolkit, and modernize the Philippine tax system.

These include the Value-added Tax (VAT) on Digital Service Providers (DSP); the Imposition of Excise Tax on Single-use Plastics (SUPs); Package 4 of the Comprehensive Tax Reform Program (CTRP); the Rationalization of the Mining Fiscal Regime; and the Reform on the Motor Vehicle Users’ Charge (MVUC).

These reforms will play a crucial role in realizing the second strategic objective to accelerate the spending program toward infrastructure and human capital development.

“These are two investment areas that will provide the highest returns in the short term and into the future,” the Finance Chief said.

He emphasized that about 37% of the PHP 5.767 trillion 2024 national budget was allocated to education, health, and social protection programs, including ayuda to at least 12 million poor and low-income families, to harness the energy and talent of millions of young and well-educated Filipinos.

Meanwhile, the government is investing in training programs that hone digital skills and critical thinking to fully equip Filipinos to adapt to new technologies and innovative solutions.

Moreover, the President’s Build Better More program consisting of 185 high-impact infrastructure flagship projects (FPs) worth PHP 9.14 trillion is expected to generate more jobs that stimulate domestic consumption while boosting competitiveness.

Secretary Recto also underscored that the government is leveraging Public-Private Partnerships (PPPs) to accelerate the roll-out of infrastructure projects all over the country.

“The success of the NAIA PPP Project–our largest to date and the quickest approved ever–highlights our focus on PPPs to accelerate the delivery of much-needed infrastructure development,” he said.

“We are rolling out major projects across the archipelago to fuel growth in the countryside, beginning with the Laguindingan Airport PPP Project in Northern Mindanao. Our goal is to make this a model for other regional airports to disperse economic activity to every island. For inclusive economy can only be achieved when growth reaches every corner of the country,” he added.

On the strategy to achieve investment-led growth, he said the government has implemented a wide range of economic liberalization measures to boost investments by reducing the cost of doing business, improving the regulatory regime, and ending constraints.

In particular, the DOF has been working to amend the Corporate Recovery and Tax Incentives Act (CREATE) to make the country’s tax regime competitive.

Under the proposed changes, income tax rates will be 20% for domestic and resident foreign corporations elected to be under the enhanced deductions regime and it will simplify the VAT regime, among others.

The Finance Chief emphasized that all these strategic initiatives are undertaken to achieve the most important number—cutting poverty incidence to single digits or 8 to 9 percent by 2028, the end of President Ferdinand R. Marcos, Jr.’s term.

“This means lifting 14 million Filipinos out of poverty. We do not intend to fail in meeting this crucial target. As this is the key indicator that our growth has translated into real improvements in the lives of ordinary Filipinos through more and better jobs, higher levels of education, and healthier lives,” he stressed.

The Finance Chief emphasized that Marcos, Jr. administration’s economic team is working hard to build an economy that will allow Filipinos’ many talents to blossom.

“It is an economy that all our people rightfully deserve, that results in comfortable lives, and that secures the future of the next generation of Filipinos. This is the promise of Bagong Pilipinas,” he underscored.

MOPC is Asia’s oldest and most prestigious press club in the Philippines which was established in 1945 by foreign correspondents.