FINANCE Secretary Benjamin E. Diokno on Tuesday said there is no need for the Philippine government to ramp up borrowings as it did during the height of the pandemic in 2020.
This as economic managers on Tuesday unveiled the game plan to achieve the Marcos administration’s ambitious economic and fiscal targets for the next six years.
“The indication is clear. We do not have to borrow as much as we did in the last years, and at the same time, we will continue to boost domestic economic activity with our massive infrastructure investment of 5-6% of gross domestic product (GDP),” Mr. Diokno said at the post-State of the Nation (SONA) economic briefing in Pasay City.
The Philippines’ debt pile reached P12.495 trillion as of end-May, reflecting the surge in government borrowings to finance its pandemic response.
As of end-March, the country’s debt-to-GDP ratio breached the 60% threshold recommended by multilateral lenders at 63.5%.
The Finance chief said the Philippines is fully prepared to address risks arising from elevated inflation, lingering effects of the pandemic and the unpredictable global economy.
“The Marcos administration will implement a comprehensive 8-point socioeconomic agenda to decisively respond to these risks and steer the economy back to its high-growth trajectory,” he said, referring to the government’s 6.5-7.5% GDP target for this year and up to 8% GDP goal for 2023-2028.
The socioeconomic agenda includes ensuring food security, reducing transportation and logistics costs, and bringing down the high cost of power. The near-term agenda also includes mitigating the scarring impact from the pandemic by addressing learning losses and strengthening social protection, as well as ensuring sound macroeconomic fundamentals by improving bureaucratic efficiency.
Mr. Diokno said that the country still has enough fiscal space to meet these ends, citing a sound tax system and 200 ready-to-implement projects left by the preceding administration.
“We will enhance the improved tax system, so that will give us more revenues… we will rightsize the government so that the government will be in much better shape and do much more with less,” he said.
Over the medium term, the Marcos administration wants to create more jobs, improve infrastructure and ensure a level playing field in markets.
“We need to address the constraints to growth [and] constraints to quality employment creation that have been well identified by our development partners. These include issues affecting infrastructure,” Socioeconomic Planning Secretary Arsenio M. Balisacan said.
Mr. Balisacan said the government will focus on improving the educational system, as well as develop high-quality job-creating sectors, particularly manufacturing.
UPPER MIDDLE INCOME
Economic managers are hoping to achieve President Ferdinand R. Marcos, Jr.’s target for the Philippines to achieve upper middle-income status by 2024.
“At the rate we are growing, and assuming that we’ll achieve the 6.5-7.5% growth this year and the 6.5-8% next year, we should be reaching that minimum of $4,250 in 2024,” Mr. Balisacan said.
The World Bank recently increased its income range for the upper middle-income bracket to a gross national income (GNI) per capita of $4,256-$13,205 from $4,096-$12,695.
The Philippines remained a lower middle-income economy despite the GNI per capita going up by 6.12% to $3,640 last year.
“That will mean that the size of the economic pie will be bigger, and that will mean that even without Mr. Diokno raising the rates of taxes, the size of the government revenues will be much bigger, and so we’ll have more resources for meeting public services and social protection,” Mr. Balisacan said.
Mr. Marcos is also aiming to reduce poverty incidence to 9% by 2028 or the end of his term.
“It’s so crucial that we are able to grow quickly, and sustain that growth because that is the most sustainable way of reducing poverty and achieving greater distribution of opportunities,” Mr. Balisacan said. — Diego Gabriel C. Robles