Finance Secretary Carlos Dominguez III said over the weekend he expects a “strong recovery” for the Philippine economy if mobility restrictions will continue to be eased in the fourth quarter to allow more people to safely return to work while complying with minimum health standards.
Dominguez said a third COVID-19 relief package would not be needed at this time, after the enactment of the Bayanihan 1 and 2 laws that were designed to provide emergency assistance to pandemic-hit individuals and sectors. He said the economy would make a strong comeback next year.
‘We are seeing a very strong recovery as we ease up the economy,” said Dominguez in a recent interview with Bloomberg Asia.
“We have a very good economy. Unfortunately, the contagion has forced us to throttle it down. But as we open up, we can see a very strong recovery through jobs,” he said.
Dominguez said that when strict quarantines were in place, the unemployment rate spiked to 17.7 percent in April, but improved to 10 percent in July when lockdowns were eased and more people were allowed to go back to work.
The government’s goal is to pull down the unemployment rate to 5 percent or 6 percent, he said.
Dominguez also assured Filipinos that the government would not impose new taxes nor sell off state-owned real estate assets to cover the revenue shortfall resulting from the coronavirus-induced lockdowns.
The government will instead tap the commercial market and possibly the Bangko Sentral ng Pilipinas to raise more funds for its pandemic response and economic recovery program, he said.
“We are not really seriously considering any taxes,” Dominguez said. “Taxing our citizens when their incomes are down is not a good idea.”
Dominguez earlier said revenue collections as of September declined by 12 percent from a year ago, but the Bureau of Internal Revenue and Bureau of Customs surpassed the revised collection targets set by the Development Budget Coordination Committee.
The combined BIR and BOC collections from January to September reached P1.82 trillion, or 8.26 percent better than the DBCC target of P1.68 trillion. The figure was 12.47 percent short of the P2.08 trillion collected in the same period last year.
Dominguez said while the government would continue to tap the commercial market to raise funds, crowding out private borrowers should not be a concern because the BSP had moved to inject additional liquidity into the market by reducing the reserve requirement ratio of banks from 18 percent to 12 percent.
He said bold reforms in tax policy and administration implemented by President Rodrigo Duterte over the past four years resulted in a revenue effort of 16.1 percent of gross domestic product last year―a significant improvement from the revenue-to-GDP ratio of 15.1 percent in 2015.
The 2019 revenue effort was also the government’s best performance in more than 20 years, he said.
The Duterte administration raised the government’s finances to support the ‘Build, Build, Build’ infrastructure program which placed the country in a strong fiscal position to meet the financial challenges of the pandemic, Dominguez said.
“So essentially, we are quite well-prepared for this [pandemic],” Dominguez said.
He underscored the Philippines’ high investment grade credit ratings, the government’s low debt-to-GDP ratio of 39.6 percent in 2019 (down from 42.7 percent in 2015) and its 20.2 percent external debt-to-gross national income ratio, which is the lowest among the ASEAN-5 countries as among the results of President Duterte’s prudent management of the country’s fiscal affairs.