THE Philippine economy may be turning the corner despite the coronavirus pandemic but government will not jeopardize public health for a restart, and vice versa.
“Rebuilding the economy is a condition for ensuring public health. We cannot fight a pandemic with a weak economy; nor can we restore economic vigor without solving the public health crisis,” said Finance Secretary Carlos Dominguez III in his keynote address during the opening session of the 29th Mindanao Business Conference held online for the first time on Sept. 10, 2020.
The finance secretary lauded the valiant efforts of businessmen who like their counterparts in the health and security sectors, were braving threats posed by the pandemic and the restrictions imposed by the quarantines and other public health countermeasures.
“While our many other workers brave the front lines to save lives and treat the infected, you, our entrepreneurs, have been fighting in the trenches to save jobs, and bring back our economy to the track of high growth,” Dominguez said. “The country is grateful for your efforts.”
The finance secretary cited how fiscal imperatives such as the TRAIN Law, the amnesties for estate taxes and delinquencies, and the increase in sin taxes to fund the Universal Health Care Program, were passed with the support of PCCI chambers nationwide.
“These initiatives have strengthened our fiscal and economic positions. We are better prepared now than any point in recent history for “black swan events” such as the Covid-19 pandemic that has put lives and livelihoods at serious risk.”
Dominguez also explained how fiscal reforms such as the Build, Build, Build Program and other measures initiated by the DOF’s Sulong Pilipinas consultations have helped bring down the country’s debt-to-GDP ratio to a historic low of 39.6% in 2019 and improved PH’s revenue stream to 60.1% of GDP last year, the highest in over two decades.
These allowed the country to build its Gross International Reserves to an unprecedented US$98.6-Billion in July 2020 and earn for the PH its highest ever credit ratings. This also helped the country bring down its poverty rate to 16.7 percent last year compared to 23.5% at the start of the present administration.
Turning the corner
Since quarantine restrictions were eased beginning July following the lockdowns of the second quarter, the Philippine economy has been gradually getting back on its feet.
“The value of production index for the month of July showed a slower annual decline of 14.8 percent from a high of 41.2 percent in April,” Dominguez shared. “Similarly, the volume of production index likewise shrank at a slower rate by 11.9 percent compared to a high of 38.8 percent in April”.
Similarly, both the Bureau of Customs and the Bureau of Internal Revenue registered hefty tax collections in August and exceeded their targets: BIR with P172.06-Billion vs. the target P118.20B, up 45.6%; and BOC P44.65B actual vs. P33.68 target, or up 32.6%.
In another favorable development, the country’s unemployment rate in July 2020 fell to 10 percent, easing from 17.7 percent in April.
Despite these however, Dominguez stressed government would continue to wage war versus Covid-19 on all fronts even if signs of recovery are emerging. He added that the administration will continue to work with Congress on economic priority bills what will make more support available for businesses, workers and families, and will come online as soon as Congress will be able to pass them.
Legislative Imperatives to Revive the Economy
“We are pushing for the swift passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act that will provide targeted incentives and bring down our country’s current corporate income tax rate of 30 percent to 25 percent as soon as possible. This will reduce further by one percentage point every year from 2023 to 2027.”
“Our government banks will also set up a company to deal with problems involving solvency issues and we will be inviting other multilateral agencies and foreign investment companies to participate.”
“We will provide greater support to the agriculture sector by giving the banking system the ability to support the whole value chain of agri-enterprises.”
“Our strategy for economic recovery rests on sustaining the Build, Build, Build program. Investments in infrastructure have the highest multiplier effect in the economy that creates jobs, fires up consumption, and spurs productive activity.”
Mindanao is front and center of our Build, Build, Build Infrastructure Program. DOF has been able to secure financing for some key infra and peace building projects in the BARMM and the rebuilding of Marawi City, even amidst the pandemic including multilateral sources like Japan and the European Union.
“It is important that we exercise fiscal prudence to ensure we do not run short of resources in this long game,” Dominguez stressed. “We will do what is necessary but we will not be wasteful.”
“What we are facing is a test of fiscal stamina. How a country’s economy performs during Covid-19 and how quickly it can bounce back once the crisis is over will depend on this economic resilience.”
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