The International Monetary Fund (IMF) has relayed to the country’s economic managers the multilateral institution’s “very optimistic” growth outlook on the Philippines owing to the economy’s continued “impressive” performance.
Luis Breuer, the chief of the IMF mission to the Philippines, also cited “the clear vision” of the Duterte administration’s economic team and commended the government’s plan to initiate a comprehensive tax reform program (CTRP), which the IMF sees as a vital component to sustain the country’s growth momentum.
“The Philippine economy is quite impressive. It is one of the most dynamic economies in the world,” Breuer said in his meeting with Finance Secretary Carlos Dominguez III and the other members of President Duterte’s economic team.
Breuer said that Asia is the engine of growth of the world economy, where the Philippines “stands out.”
In its World Economic Outlook released in April, the IMF said the Philippines’ GDP would expand 6.8 percent this year and 6.9 percent in 2018.
According to Breuer, the mission sought a meeting with the economic managers to discuss the Philippine government’s priorities and the challenges that the country expects to meet in the face of global uncertainties.
“We are here to assess the Philippine economy and I would appreciate hearing your views on the economy and your priorities,” Breuer told Dominguez and the other economic managers.
Also present in the meeting with the IMF team were Secretaries Benjamin Diokno of the Department of Budget and Management (DBM) and Ernesto Pernia of the National Economic and Development Authority (NEDA), Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Gunigundo, National Treasurer Rosalia de Leon, and DOF Undersecretary Gil Beltran.
The IMF mission included Breuer, Elena Loukoianova, Jaime Custodio Guajardo, Serhan Cevik, Minsuk Kim, Yongzheng Yang and Jay Peiris.
Breuer also reiterated the IMF’s support to the Duterte administration’s CTRP and offered the institution’s assistance in implementing the government’s initiatives on tax reform.
Tax reform and the government’s massive investments in infrastructure. Breuer said, will yield even more positive results for the Philippine economy.
“Over all, we have a very positive impression of the Philippines,” said Breuer, adding that “we would like to support the initiatives you have in your tax reform (program).”
Speaking on behalf of the economic team, Dominguez said the government is taking advantage of the beneficial developments propping up the country’s economy to fulfill President Duterte’s vision of high–and inclusive–growth.
These beneficial factors include, he said, the current low-interest rate regime, a benign inflation rate, low oil prices and the country’s “robust, young workforce.”
“It’s very important that we start planning when things are good and get insurance so we are prepared when things will turn out bad,” he said.
“We have decided to have a strong infra program which we call the ‘Build, Build, Build,’ and this will be supported by a tax reform program,” the finance chief added.
Dominguez said the CTRP will raise additional revenues while, at the same time, correct the flaws, inequities and inefficiencies in the current system.
“All our economic programs are in sync,” Dominguez said.
In a briefing before the House committee on appropriations on the proposed 2018 budget, Dominguez assured lawmakers of the Duterte administration’s firm commitment to fiscal stability, which it aims to sustain through reforms in tax policy and administration, a manageable budget deficit and a prudent borrowing policy that favors domestic, peso-denominated sources.
He told lawmakers that “between now and 2022, with tax reforms and continuing improvement in tax administration, we are looking to improving the ratio of revenues to GDP from the current 15 percent to 17.7 percent in 2022. Tax revenues-to-GDP will increase from 13.7 percent in 2016 to 17 percent by 2022. This will bring our tax effort to about the regional average.”
Dominguez likewise assured lawmakers that despite the Duterte administration’s aggressive spending plan to close the infrastructure gap and expand social services, the budget deficit will remain at an average of 3 percent of GDP between now and 2022.
This is doable, Dominguez said, because the national government aims to raise total revenues of P2.8 trillion, or 16.3 percent of GDP in 2018, which will include revenue measures of P133.8 billion.
With the yields from the revenue measures and the continued implementation of administrative reforms by revenue collecting agencies, the government expects revenues to grow by 17 percent in 2018, he said.