The Philippines has enough financial firepower or fiscal space to ramp up spending, and by this measure achieve the high growth needed to make financial inclusion happen, the Department of Finance said on Thursday.
Finance Secretary Carlos G. Dominguez III said even more aggressive spending on the “Build, Build, Build” (BBB) program and other poverty-reduction initiatives would allow the government to achieve local output growth measured as the GDP averaging 7 percent or better.
This, in turn, should help reduce the poverty-incidence rate to only 14 percent over the medium term instead of some 21 percent at present.
“President Duterte’s commitment to attaining an investment-led and inclusive economy via a massive public spending strategy would usher in what the Asian Development Bank [ADB] has forecast to be the ‘golden age’ of the Philippines’s economic growth,” Dominguez said in reaction to the announcement by the Philippine Statistical
Authority (PSA) on GDP growth of 6.8 percent in the first quarter.
The PSA said the industry sector recorded the fastest growth averaging 7.9 percent, while the services sector expanded 7 percent and agriculture at 1.5 percent. It further said the services sector had the highest contribution to GDP expansion with 4 percentage points, followed by industry with 2.7 percentage points and agriculture with 0.1 percentage points.
Socioeconomic Planning Secretary Ernesto M. Pernia noted the growth report was the 10th consecutive quarter when economic expansion stood above 6.5 percent.
“With President Duterte’s foreign policy recalibration, which has enabled the government to secure ODA [official development assistance] from our friends in the region plus grants and concessional loans from multilateral institutions; above-target performance by our revenue agencies as a result of the TRAIN [Tax Reform for Acceleration and Inclusion] law; and investment-grade credit ratings responsible for successful bond floats here and abroad, the government now enjoys a large headroom for high and inclusive growth,” Dominguez said.
The growth-boosting BBB program is now in full swing, with 35 projects having already been approved by the National Economic and Development Authority (Neda) Board, from the total of 75 big-ticket infrastructure projects worth $170 billion designed to reverse regional underdevelopment and income inequality by creating growth corridors all over the country.
“Of these projects, 35 have already passed the approval process, while the rest are expected to get the go-ahead before year-end. Our people will feel the economic benefits of these projects soon enough, and our country would move up to upper middle-income status by the time the President leaves office in 2022,” he said.
Dominguez also said that, in the first three months, the TRAIN law delivered on its promise to help provide a steady revenue flow for the government’s massive investment program.
The Bureau of Internal Revenue collected in the first quarter P423.1 billion or a 14 percent more year-on-year (YoY), from P370.404 billion, while the Bureau of Customs collected P129.8 billion, or a 25-percent increase, from last year when this totaled only P104.13 billion.
The Department of Budget and Management reported total government disbursements of P782 billion, or a 27-percent increase YoY. Of this amount, P157.1 billion went to infrastructure, or a 34-percent increase from the year-ago amount.
Dominguez said revenue collections would go up further with the succeeding packages of the Comprehensive Tax Reform Program, which the Congress is expected to act on this year.