Finance Secretary Ralph G. Recto has hit the ground running towards an inclusive future that benefits all Filipinos by introducing growth-enhancing strategies in the government’s economic roadmap during his first 100 days in office.

“The President has entrusted me with the monumental task of delivering an economy that is inclusive and sustainable––one that works for the betterment of every Filipino and the future generations to come. I therefore made it my priority to recalibrate our fiscal targets to make sure that strategic growth-enhancing fiscal consolidation is being pursued,” he said.

“My first 100 days in office already felt like a year but I am very fortunate to be surrounded by highly talented and competent individuals within the DOF who all help me ensure that we achieve genuine economic transformation for our people,” he added.

Together with the Development Budget Coordination Committee (DBCC) economic managers, Secretary Recto has recently recalibrated the government’s medium-term macroeconomic assumptions, fiscal program, and growth targets for 2024 to 2028 to reflect both domestic and global developments.

“These are more realistic targets that respond more directly to the needs of the Filipino people,” he stressed.

Specifically, the country is expected to expand by 6.0% to 7.0% in 2024, even higher at 6.5% to 7.5% percent in 2025, and up to 6.5% to 8.0% for 2026 to 2028.

Over the medium term, the government’s revenue performance will continuously increase from PHP 4.27 trillion (16.1% of GDP) in 2024 to PHP 6.08 trillion (16.4% of GDP) in 2028.

Based on this outlook, the fiscal deficit will decrease in a sustainable and strategically paced manner under this administration, reaching 5.6% of GDP in 2024 to only 3.7% in 2028.

At the same time, the economy will continue to outgrow the country’s debt in the medium term with the debt-to-GDP ratio further declining from 60.3% in 2024 to 55.9% in 2028.

To achieve these targets, Secretary Recto said his first order of business is to collect PHP 4.3 trillion in revenues this year.

Upon assuming office, the Finance Chief immediately convened Commissioners Romeo Lumagui, Jr. and Bienvenido Y. Rubio to improve the Bureau of Internal Revenue (BIR) and the Bureau of Customs’ (BOC) revenue administration efficiency by ensuring ease of paying taxes and accelerating their respective digitalization programs.

Relevant government offices were also instructed by the Secretary to pursue data-sharing agreements with the collecting agencies to reconcile records.

As a result, both agencies posted strong growth performance in their revenue collections for the first three months of 2024.

The BIR was able to collect PHP 591.8 billion in the first quarter of 2024, 17.15% (PHP 86.6 billion) higher than the PHP 505.2 billion it generated in the same period in 2023.

On the other hand, the BOC raised PHP 218.9 billion during the same period, outperforming last year’s collections of PHP 213.8 billion by 2.35% (PHP 5.0 billion).

Secretary Recto was able to secure commitments from both the World Bank Group (WBG) and Asian Development Bank (ADB) to support the Philippine government’s goal of fully digitalizing the tax system to improve revenue generation. 

To broaden the tax base, Secretary Recto has also refined the existing priority revenue measures of the Department of Finance (DOF) during his first week in office.

Under Secretary Recto’s leadership, the DOF will not pursue any new tax proposals that would unnecessarily burden Filipino consumers and taxpayers. 

Instead, he has fine-tuned existing priority revenue measures to guarantee that these are fairer, easier to collect, and more practical.

Among these priority measures are the Value-added Tax (VAT) on nonresident Digital Service Providers (DSP); the Imposition of Excise Tax on Single-use Plastics (SUPs); Package 4 of the Comprehensive Tax Reform Program (CTRP); the Rationalization of the Mining Fiscal Regime; and the Reform on the Motor Vehicle Users’ Charge (MVUC).

Meanwhile, the Finance Chief also placed greater emphasis on improving non-tax revenue collections to generate more funding for the Marcos, Jr. administration’s priority infrastructure and socio-development projects.

Secretary Recto has increased the dividend rate remittance of the government-owned or -controlled corporations’ (GOCCs) from their net earnings for 2023 from the minimum of 50%, as mandated in Republic Act (RA) No. 7656, to 75%.

As of April 24, 2024, dividend collections from GOCCs already amounted to PHP 39.8 billion, representing a fivefold increase from the PHP 8.0 billion recorded during the same period last year.

The Secretary likewise signed the Department  Circular 003-2024 on February 27, 2024 which provides the guidelines to implement the Special Provisions of the 2024 General Appropriations Act (GAA).

This Circular will enable the DOF to mobilize substantial non-tax revenues from GOCCs’ unrestricted fund balances to unlock the Unprogrammed Appropriations of the 2024 GAA to fund the President’s priority programs and projects. 

Secretary Recto is also intensifying the push for the privatization of government assets, which will lead to better operational efficiency and higher investment returns.

In this regard, he ordered the Privatization Management Office (PMO) to recalibrate its list of assets for disposal to include those in mining, construction, as well as residential and commercial lots, among others.

Meanwhile, to meet the country’s financing requirements of PHP 2.57 trillion this year, Secretary Recto and the Bureau of the Treasury (BTr) developed a strategic fundraising plan that will continue to adopt a 75:25 borrowing mix in favor of domestic sources.

This prudent debt management strategy will allow the country to effectively mitigate foreign exchange risks, take advantage of ample liquidity in the country’s financial system, and support the development of the local debt and capital markets.

During the first quarter of 2024, the government raised a total of PHP 584.9 billion for its 30th tranche of Retail Treasury Bonds (RTB 30) issuance, making it the largest domestic fundraising issue to date. 

The RTB 30 also allowed ordinary Filipinos to invest in safe and stable sources of passive income, while promoting financial literacy and inclusion.

As a crucial step to further growing the economy, Secretary Recto also assured that addressing inflation will continue to be his top priority and has introduced the Reduce Emerging Inflation Now (REIN) plan to mitigate this through the proactive management of price pressures.

The Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO), co-chaired by the Secretaries of the DOF and the National Economic and Development Authority (NEDA), has been meeting regularly to ensure the accelerated implementation of direct measures to curb food and non-food inflation.

Moreover, the Finance Chief has successfully secured financing agreements with the Japan International Cooperation Agency (JICA) for two big-ticket infrastructure projects under the administration’s Build Better More program that will help drive inclusive growth for all Filipinos.

On March 26, 2024, Secretary Recto signed loan agreements with the Japan International Cooperation Agency (JICA) for the third tranche of financing for the Metro Manila Subway Project (MMSP) Phase 1, worth JPY 150 billion (about PHP 55 billion) and the first tranche of financing for the Dalton Pass East Alignment Road Project (DPEARP) worth JPY 100 billion (about PHP 37 billion).

The MMSP Phase 1 is the country’s first-ever underground mass transport system. It involves the construction of a Depot and a 33-kilometer (km) railway system consisting of 17 stations that shall connect Valenzuela City to Bicutan with a branch line going to NAIA Terminal 3 in Parañaque City.

Meanwhile, the DPEARP is one of the biggest infrastructure projects in Central and Northern Luzon that involves the construction of a 23-km alternative road, linking Nueva Ecija and Nueva Vizcaya to the Cagayan Valley Region

The Finance Secretary was able to negotiate highly favorable terms for the loan agreements for the said projects via JICA’s Special Terms for Economic Partnership (STEP), which carries an interest rate of 0.30% per annum for non-consulting services and 0.20% per annum for consulting services, to be repaid in 40 years, inclusive of a 10-year grace period.

Secretary Recto also took it upon himself to personally conduct regular worksite visits on projects funded under Official Development Assistance (ODA) to ensure that they are moving efficiently as planned, starting with the MMSP at the East Valenzuela Depot on February 26, 2024.

On top of these, Secretary Recto has successfully positioned the Philippines at the forefront of crisis and disaster response by being the first country to sign the Rapid Response Option (RRO) agreement with the WBG on April 20, 2024.

The RRO is part of the WBG’s Expanded Crisis Preparedness and Response Toolkit, which empowers client countries to deploy resources from their existing Bank portfolio more effectively to deliver a swift response when crises occur.

Meanwhile, the Finance Chief has laid out a comprehensive plan to drive investments-led growth by improving the country’s regulatory regime, reducing the cost of doing business, and addressing constraints.

Under Secretary Recto’s term, the Fiscal Incentives Review Board (FIRB) increased the investment capital threshold for projects delegated to Investment Promotion Agencies (IPAs) from PHP 1 billion to PHP 15 billion through FIRB Resolution No. 003-24. 

This will empower IPAs with greater authority in granting incentives and usher in revenue- and job-generating investments into the country.

To boost the influx of investments into the country, Secretary Recto supported the passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE), which was approved by the House of Representatives on third and final reading on March 18, 2024.

The bill will enhance the ease of doing business by improving the country’s tax incentives policy and administration, and tailor-fit the interests of investors in strategic investments.

Secretary Recto also supported the signing of the Public-Private Partnership (PPP) Code’s Implementing Rules and Regulations (IRR) on March 21, 2024. 

With the IRR in place, the floodgates for a sustained flow of strategic investments have been unlocked to deliver top-tier infrastructure and public services to the Filipino people.

Moreover, Secretary Recto successfully led the hosting of the World Economic Forum (WEF) Country Roundtable in Manila on March 19, 2024, which garnered strong investment interest from top global executives from the energy, infrastructure, finance, banking, telecommunications, and marketing sectors. 

He has also thus far led economic briefings in Australia and the US where he successfully pitched the country as an attractive investment hub and garnered strong interest for investments and business expansions from Australian and American investors.

The Finance Chief emphasized that all these strategic growth-enhancing initiatives are undertaken to achieve the most important number, which is cutting poverty incidence to a single digit or 9 percent by the end of the President’s term in 2028.

“This means lifting 14 million Filipinos out of poverty. We do not intend to fail in meeting this crucial target. As this is the key indicator that our growth has translated into real improvements in the lives of ordinary Filipinos through more and better jobs, higher levels of education, and healthier lives,” he stressed.

“The Marcos, Jr. administration is building an economy that will allow Filipinos’ many talents to blossom. It is an economy that all our people rightfully deserve, that results in comfortable lives, and that secures the future of the next generation of Filipinos. This is the promise of Bagong Pilipinas,” the Finance Chief said.

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