DOF, Chinese embassy agree to intensify ties in 5 areas of cooperation (Photo Credit: DOF) by DOF MANILA - Finance Secretary Carlos Do...
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| DOF, Chinese embassy agree to intensify ties in 5 areas of cooperation (Photo Credit: DOF) |
MANILA - Finance Secretary Carlos Dominguez III has assured foreign credit rating institutions that President Duterte remains “fully engaged” in implementing his 10-point socioeconomic agenda focused on inclusive growth, while vigorously carrying out his other priority goals of eliminating crime and corruption and forging lasting peace within the country and with its neighbors.
Meeting with officials from international credit rater Moody’s Investor Service, Dominguez urged them not to be distracted by the political noise generated by the President’s non-traditional type of governance, as Mr. Duterte remains fully committed to keeping the economy on its upward trajectory and making growth inclusive for all Filipinos.
“If you talk about the political noise, yes, there is. It’s inevitable for someone who’s shaking up the tree. It’s inevitable because of the personality of the President and people not used to this type of governance. But he’s fully engaged in [the administration’s] economic agenda,” Dominguez told Moody’s officials.
Moody’s was represented in the meeting by Christian de Guzman, vice president and senior credit officer; Atsi Sheth, managing director; and Matthew Circosta, associate analyst, all of the Sovereign Risk Group.
Dominguez told Moody’s executives that the Duterte administration would carry out its inclusive growth agenda while building on the economic gains of the past administrations and exercising fiscal responsibility.
Moody’s currently rates the Philippines as Baa2, an investment grade rating with a stable outlook. This credit rating is higher than what Moody’s has given Vietnam and India.
Dominguez informed them that President Duterte has been meeting with congressional leaders to push a key component of his 10-point socioeconomic agenda, which is the overhaul of the tax system by introducing sweeping reforms in tax policy and administration.
The tax reform plan being proposed by the Department of Finance (DOF), the first component of which was already submitted to the Congress last Sept. 26 also aims to ease the tax burden on wage earners and the middle class as well as protect the country’s vulnerable sectors, while raising enough revenues to accelerate spending on infrastructure, human capital, social protection and agricultural modernization.
He pointed out that the first package of the proposed tax reform program was completed and submitted to the Congress less than 90 days into the Duterte administration.
Dominguez said that even before he was sworn into office, Mr. Duterte and his economic team already buckled down to work by holding extensive consultations with the business community and civil society organizations to help come up with the administration’s 10-point socioeconomic agenda.
He said that the next thing that President Duterte plans to do is to hold consultations with mayors, governors and other local chief executives “to basically hear what they want, and to tell them what we want; and what we want is no corruption and no crime.”
Dominguez informed Moody’s officials that President Duterte’s paramount goal is to bring down the poverty rate, which has been stuck at 26 percent, to 17 percent by the time he steps aside in 2022.
He pointed out, though, that reducing the poverty rate cannot be accomplished unless the President also focuses on his two other priority goals, which is to transform the country into a law-abiding society by eliminating crime and corruption, and ensuring lasting peace within the country and with its neighbors.
Poverty reduction requires massive investments in infrastructure, human capital and social protection, and “doing something that no other government has done, which is to implement the Reproductive Health Law,” regardless of the expected opposition from some sectors, Dominguez said.
He said the infrastructure buildup would be spread outside Mega Manila, which means improving logistics, communications and power facilities in such areas as the northern and eastern parts of Luzon, Eastern Visayas and Mindanao.
“It would be almost criminal, negligent of us not to do what we’re going to do,” Dominguez said.
The DOF chief also informed Moody’s officials that the government would get tough against tax evasion, illegal gambling and smuggling, and is now working to drastically cut red tape in the bureaucracy, ease the process of making tax payments, and pave the way for transparent, paperless transactions in the Bureau of Customs by implementing the Customs Modernization and Tariff Act.
He said the Duterte administration’s seemingly ambitious goals are doable as the Philippine economy is now in a “Goldilocks moment”, with excess liquidity in the market; a low real interest rate of only 1.8 percent, which is only next to Japan that has around 1 percent; a low inflation rate; low borrowing costs; and a domestic currency that is currently good for exports, the country’s overseas workers and the business process outsourcing industry.
He also pointed out that the government recently auctioned off 10-year retail treasury bonds that received an overwhelmingly positive response in the market.
Such positive factors, Dominguez said, allows the government to increase its deficit spending from 2 percent to 3 percent of the Gross Domestic Product and thereby increase public investments in its pro-poor and growth-friendly priority programs. (DOF)
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