THE passage and implementation of the government’s tax and fiscal reforms is needed to sustain a higher economic growth such as the 6.9-percent expansion registered in the third quarter the year, the Finance Department said Friday.
The third-quarter economic expansion brought the year-to-date average to 6.7 percent, already above the lower limit of the target range of 6.5 percent to 7.5 percent. The strong performance of the industry and services sectors drove the growth higher.
“Solid macro-economic fundamentals will continue to support the country’s robust economic growth. The strong fiscal position backed up by robust revenue collection will support double-digit expansion in public construction which is one of the main pillars of growth,” the DoF said.
It said greater investments in infrastructure and social services such as education, health, and social protection would sustain a higher long-term growth path and translate the same into inclusive development.
“In this regard, the passage and implementation of fiscal reforms to finance these game-changing investments is most urgent,” the DoF said.
The first package of the Comprehensive Tax Reform Program (Tax Reform for Acceleration and Inclusion Act or TRAIN) was approved by the House of Representatives in May. The Senate is currently deliberating on the measure.
Finance Secretary Carlos DomingueZ III remained optimistic the TRAIN could be signed into law before the close of the year to allow the government to implement the tax reform in January next year.
Commenting on the better-than-expected 6.9-percent growth in the third quarter, Dominguez said an even better growth could be achieved in the succeeding quarters as the Duterte administration accelerated infrastructure spending and human capital development to boost the economy and move closer to financial inclusion.
Dominguez remained confident that the official full-year target expansion of 6.5 to 7.5 percent could be achieved as the government accelerated spending on infrastructure which has the highest multiplier effect on growth and human capital formation.
Compared with other Asian countries, the Philippines remained one of the region’s best performing economies, second to Vietnam which reported a 7.5-percent growth in the third quarter, and higher than China’s 6.8 percent and Indonesia’s 5.1 percent during the same period.
ING Bank Manila senior economist Joey Cuyegkeng said the acceleration of government construction under the ambitious P8.44-trillion “Build, Build, Build” program would be favorable for the fourth quarter this year.
The government aims to build more airports, seaports, highways, railways, water and irrigation projects in the country. Also included is a subway in Metro Manila in a bid to decongest the metropolis of heavy traffic that has been causing billions of pesos in economic losses daily.
The economy grew by 6.4 percent in the first quarter, slower than expected, due to sluggish pace of government spending and base effects. But growth picked up in the second quarter to 6.5 percent as the government increased fiscal spending.