Finance Secretary Carlos Dominguez III stressed today that although the budget deficit incurred by the national government (NG) hit P353.4 billion in 2016, or P231.7 billion higher than the year-ago figure, it was well within the Duterte administration’s target of 2.7 percent of the Gross Domestic Product (GDP), in keeping with its commitment to start spending big on three priority areas to sustain high growth, attract investments and create jobs, accelerate poverty reduction and transform the Philippines into an upper middle-income economy by 2022.
Dominguez pointed out that Malacañang’s decision to ramp up public spending on infrastructure, human capital and social protection at the onset of the Duterte presidency had helped the economy sustain its growth momentum in 2016’s second semester, with the GDP expanding by 6.8 percent, from 5.9 percent the previous year, or in the high side of the government-set range of 6 to 7 percent for the full year.
“The Duterte administration’s decision to end years of public underinvestment and switch to higher deficit-spending mode has translated into more money spent on infrastructure; on education, health, skills training and other forms of human capital development, and on social protection for the poorest of the poor,” Dominguez said.
“This major policy shift, in turn, has allowed the NG to keep the domestic economy on the uptrend despite global market volatility,” he added.
Dominguez said that last year’s budget deficit “gives all the more reason for the Duterte administration to pursue the speedy congressional approval of its Comprehensive Tax Reform Program (CTRP) to raise enough revenues for the financial sustainability of its ambitious agenda to reverse years of official underspending, which has been responsible for the government’s failure to turn the economy into a truly inclusive one.”
He said the government’s deficit spending policy is in sync with the government’s 10-point socioeconomic agenda to keep the high-growth pace, attract more private investments from here and abroad, cut the poverty rate from 21.6 percent in 2015 to 14 percent by 2022, and to turn the economy by then into an upper middle-income economy with a per capita gross national income of at least $5,000, or close to where Thailand is today.”
Package One of the CTRP, which is anchored on sizable cuts in personal income tax rates along with revenue-compensating measures like adjusting excise tax rates on automobiles and petroleum products and expanding the value added tax (VAT) base, is contained in House Bill No. 4774 that is now being studied by the House ways and means committee.
It was authored by Quirino Rep. Dakila Carlo Cua, the chairperson of this committee who has expressed the hope that his panel could pass HB 4774 before the Congress takes its traditional Lenten break starting on March 17.
