The Duterte administration’s prudent fiscal management strategy has positioned the Philippines as among the countries “in good shape” to meet the challenges spawned by the coronavirus disease 2019 (COVID-19) pandemic and bounce back from this global health crisis, according to the World Bank’s newly named director for the country.
With the Philippines’ debt of equivalent to just 40 percent the size of its economy at the time the coronavirus pandemic struck, its government has enough fiscal space to address the emergency triggered by the COVID-19 global crisis, said Mr. Ndiame Diop, the newly designated country director of the World Bank for Brunei, Malaysia, the Philippines and Thailand.
“We are looking at the Philippines and comparing to other countries in the region and looking at the initial condition, what is the economic condition when the pandemic hit.… I think the prudent fiscal management of the past few years has really positioned the country to be among the countries that are really at the forefront in terms of capacity to respond on the fiscal side,” Mr. Diop said in a recent virtual meeting with Finance Secretary Carlos Dominguez III and members of the Duterte administration’s “Build, Build, Build” infrastructure team.
The Philippines’ debt-to-GDP (gross domestic product) ratio before COVID-19 plunged the world into a global economic downturn was at only 39.6 percent in 2019.
Secretary Dominguez has underscored the conservative fiscal policies of President Duterte as a critical factor in maintaining the Philippines’ high credit worthiness, which has enabled it to secure borrowings from development partners for the government’s COVID-19 response efforts at the least cost.
Mr. Diop said other countries facing national debts in relation to their respective GDPs of 60 to 70 percent will face a “tough” period ahead. “So I think the good shape in which the Philippines is under this crisis positions it very, very well going forward,” he added during the meeting held via the Zoom teleconferencing tool.
Secretary Dominguez, for his part, thanked Mr. Diop and the World Bank for providing the government policy advice on how to maintain the country’s strong fiscal position, which has resulted to, among others, the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
TRAIN, which raised state revenues in 2019 to more than 50 percent than it was before the administration of President Duterte, helped provide the government the fiscal space required to meet the massive state funds needed to fight COVID-19 and provide relief to the poor and other virus-hit sectors, Secretary Dominguez said.
Secretary Dominguez assured the World Bank that even amid the pandemic, the Duterte administration is fully committed to carry out its “Build, Build, Build” infrastructure program, which was another recommendation of the multilateral institution in sustaining the Philippines’ inclusive growth strategy.
“We look at the ‘Build, Build, Build’ program as our main means of (stimulating) the economy, putting money in the pockets of the people, while at the same time constructing the needed infrastructure. We are going to be very reliant on the ‘Build, Build, Build’ program to bring us out of this recession,” Secretary Dominguez said of President Duterte’s centerpiece project.
Mr. Diop said the World Bank is looking forward to “getting quick results” in its infrastructure engagement with the Philippines.
Secretary Dominguez assured Mr. Diop that the Philippines will strive to maintain its status as among the Top 10 countries in the world in terms of planning and executing their respective infrastructure programs, based on the results of a recent independent global survey.
Budget Secretary Wendel Avisado, who was also present at the Zoom meeting, pointed out the results of the 2019 Open Budget Survey that showed the Philippines as No. 1 among Southeast Asian economies and ranking 10th worldwide in terms of making their national budgets transparent and open to the public.
Both Secretaries Dominguez and Avisado assured the World Bank of the transparent, judicious and efficient use of the funds extended by the institution to the Philippines to support the government’s COVID-19 response and other priority programs such as “Build, Build, Build.”
Also present at the Zoom meeting with Mr. Diop were Secretaries Mark Villar of the Department of Public Works and Highways (DPWH), Arthur Tugade of the Department of Transportation (DOTr), Acting Secretary Karl Kendrick Chua of the National Economic and Development Authority (NEDA); Finance Undersecretaries Mark Dennis Joven and Grace Karen Singson; and Finance Assistant Secretary Maria Edita Tan.
From the World Bank, among those who attended the Zoom meeting were Mr. Achim Fock, the Operations Manager for Brunei, Malaysia, Philippines and Thailand; Mr. Gabriel Demombynes, Program Leader for Human Development; Mr. Souleymane Coulibaly, Program Leader for Equitable Growth, Finance and Institutions and Lead Economist; Ms. Madhu Raghunath, Sector Leader for Sustainable Development; and Ms. Rong Qian, Senior Economist, Macroeconomics, Trade and Investment.