Gov’t to keep deficit target
THE DUTERTE administration would strictly observe fiscal discipline amid plans to further increase government spending, Finance Secretary Carlos G. Dominguez III said.
“We are fortunate that the last two administrations have managed government finances well, as this has given us headroom for higher public spending. We will absolutely make sure we do not breach the deficit ceiling,” Dominguez told local and foreign portfolio investors and fund managers during a conference call last Aug. 16.
The Duterte administration had programmed to widen the annual budget deficit to 3 percent of the gross domestic product (GDP) in the next six years from 2 percent during the Aquino administration, in line with plans to ramp up public expenditures especially on infrastructure and social services.
Dominguez said infrastructure would be “the country’s next pillar of growth,” with a focus on information technology, logistics and transportation, power and telecommunications. The government also wanted infrastructure development to spread out to areas outside Metro Manila.
Quoting economic managers, the government’s Investor Relations Office (IRO) said “significantly higher government spending is indispensable if the government is to make economic growth truly inclusive and if the goal of reducing poverty incidence in the country, from 26.3 percent in the first semester of 2015 to just 17 percent by 2022, is to be realized.”
A comprehensive tax reform would allow the government to aggressively spend and still not exceed its deficit ceiling program, Dominguez said.
Among the revenue-generating measures being pitched by the Department of Finance to Congress include easing the bank secrecy law and making tax evasion a predicate crime to money laundering, which would then require a separate punishment. The government is also aiming to combat corruption and red tape in the Bureaus of Customs and Internal Revenue, the country’s two biggest tax-collection agencies.
“We will improve efficiency of our revenue-collecting agencies and move quickly to reduce corruption,” Dominguez said during the conference call.
National Treasurer Roberto B. Tan was also quoted by the IRO as saying that “with the targeted budget-deficit ceiling of 3 percent of GDP, the government will be able to sustain the drop in the country’s debt ratios.”
“The outstanding debt of the national government is projected to settle at 42.66 percent of GDP this year and 40.86 percent in 2017. The debt-to-GDP ratio is projected to sustain the yearly decline until falling to about 35 percent by the end of the Duterte administration,” Tan said.
