THE GOVERNMENT is confident the economy will sustain a 7% growth rate over the medium term, the Finance department said.
“The 6.5% growth for the first semester makes the Philippines the second-fastest growing economy in Asia after China. We retain the 7% growth rate target for the year, spurred by the investment spending in the infrastructure program. We believe this growth rate is sustainable well into the medium term,” Finance Secretary Carlos G. Dominguez III said in a statement on Friday.
He said his confidence is based on the government’s ability to deliver on its P8.4 trillion infrastructure program.
Government spending in the nine months to September was up 8% year-on-year at P2.01 trillion, equivalent to 69.23% of the P2.91 trillion target for 2017.
“Increased investments in modernizing the country’s infrastructure will be the key driver of our growth the next few years. These investments seek to bring up our infra to match those of our most progressive neighbors. By modernizing our infrastructure, we will address congestion in our ports, airports and roads,” Mr. Dominguez said.
“Investing in infrastructure has the highest multiplier effect on the economy. It creates construction jobs in the short term and manufacturing jobs in the long term. It improves land prices, assists in raising our agricultural productivity and encourages dispersal of our industries into the regions,” he added.
The government aims to raise the share of infrastructure spending to 7.4% of gross domestic product by 2022, from a 4.7% share in 2016, and 5.4% programmed this year.
“The quality of our infrastructure fell behind those of our neighbors because of many years of under-investment. While we grappled with the debt crisis and imposed austerity, our investment in new infra fell to nearly half the regional average.”
The Philippine Statistics Authority (PSA) will release the third quarter gross domestic product (GDP) results on Nov. 16.
Mr. Dominguez also noted that agriculture will also keep pace with rapid growth due to more investment in modern farm systems, which will, in turn, “speed up the liberation of our rural poor from poverty.”
However, he said that the government has to pass the comprehensive tax reform program, to enable it to pay for its infrastructure buildup.
The government tax plan, in its current configuration under the approved House Bill No. 5636, would yield P133.8 billion in the first year of implementation.
Its counterpart bill in the Senate is still under deliberation less than two months before it is due to be implemented in January.
“We are hopeful this first package could be enacted before the end of the year. This will enable us to implement income tax rate reductions and increased exemptions by the start of next year,” Mr. Dominguez said. — Elijah Joseph C. Tubayan