Finance Secretary Carlos Dominguez III expects the economy to expand faster this year now that the Duterte administration’s programs to modernize public infrastructure and sustain the growth momentum have started falling into place.
The additional revenue take from the Tax Reform for Acceleration and Inclusion Act (TRAIN) plus new money from Official Development Assistance (ODA) deals and the successful float of $2 billion-worth of 10-year US dollar-denominated bonds would ensure a steady revenue flow for the government’s aggressive spending on public infrastructure, which, in turn, would spell greater economic activity.
Moreover, he said, sizable personal income tax (PIT) cuts under the TRAIN law would boost consumer spending and help spur greater economic activity.
“These developments, which attest to President Duterte’s unwavering political resolve to effect real positive change and the corollary strong investor confidence in the domestic economy on his watch, would guarantee enough fiscal space to let Government continue pursuing an expansion policy leading to nonstop high—and inclusive—growth,” Dominguez said.
“As I said last year, there will be a more exciting growth narrative for the Philippines this 2018, more so now that all of the government’s plans to keep the country among the world’s fastest-growing economies have started falling into place,” he said.
Dominguez issued this statement on the country’s rosy growth prospects as the Philippine Statistics Authority (PSA) reported on Tuesday a gross domestic product growth of 6.6 percent in the fourth quarter and a full year GDP expansion of 6.7 percent.
According to Secretary Pernia of the National Economic and Development Authority (NEDA), the 6.7 percent full-year GDP growth in 2017 remains one of the fastest in the region, after China’s 6.9 percent and Vietnam’s 6.8 percent.
Dominguez said the government is assured of adequate funds for its ambitious “Build, Build, Build” program because of incremental revenues from the first set of the TRAIN package enacted into law—estimated to reach P89.9 billion this 2018 alone—along with ODA inflows arising from President Duterte’s foreign policy rebalancing towards Asia and last week’s successful $2-billion global fund float, of which $750 million was allocated to raise new money.
As regards ODA deals, Dominguez himself signed with Asian Development Bank president Takehiko Nakao $680 million worth of assistance, comprising a $380 million loan agreement for the Improving Growth Corridors in Mindanao Road Sector Project (IGCMRSP) and formalized the exchange of documents on the $300 million Encouraging Investment Through Capital Market Reforms (EICMR) Program-Subprogram 2.
Moreover, the government boasts a much better absorptive capacity, which will lead to the faster release and more judicious use of public funds to bankroll the rollout of big-ticket projects.
Department of Budget and Management (DBM) data showed a dramatic increase in last year’s spending on infrastructure, with infra disbursements jumping 44.8 percent year-on-year to P43.8 billion last November.
The Duterte administration aims to implement 75 projects worth over $35.5 billion and that would create a projected 1.7 million jobs over the medium term, thereby keeping the country on the road to reducing the poverty rate to 14 percent and transforming the economy into an upper middle-income one by 2022.
Alongside these initiatives, Dominguez said the government is also set this year to ease economic restrictions by reducing the Foreign Investment Negative List (FINL) and fast-track measures to cut red tape and improve the ease of doing business, in a bid to attract more foreign direct investment (FDI) flows and further stimulate economic activity. (DOF-PR)
