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Philippines
Thursday, March 28, 2024

Government medium-term fiscal plan okayed

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The House of Representatives on Monday adopted House Concurrent Resolution 2, supporting President Ferdinand Marcos Jr.’s 2022-2028 Medium-Term Fiscal Framework.

The plan aims to attain short-term macro-fiscal stability while remaining supportive of the economic recovery and promoting medium-term fiscal sustainability.

Speaker Martin G. Romualdez, House Majority Leader Manuel Jose Dalipe, and House Minority Leader Marcelino Libanan authored the resolution which aims to consolidate the National Government’s resources so that these are mobilized and utilized to gain the maximum benefit and high multiplier effects for the economy.

The fiscal framework shall be subject to review and updating in three years, or in 2025, prior to the 20th Congress, to reflect current economic conditions and developments, according to the resolution.

Albay Rep. Joey Salceda, the chairman of the House Committee on Ways and Means, hailed the approval of the resolution.

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He said the proposed MTFF is a “step towards following international best practices on tax policymaking,” and a “codification of the Marcos administration’s covenant with the Filipino people on key economic and fiscal objectives.”

Salceda, who sponsored the measure on the House floor Monday, called it “a good way to set the tone for the upcoming budget discussions.”

The framework specifically lays down the near-term socioeconomic agenda which will continue to implement risk¬ managed interventions in areas of food security, transport and logistics, energy, fiscal management, health, education, social protection, and bureaucratic efficiency.

This would ensure the unimpeded and adequate delivery of social services, mitigate inflation pressures, accelerate economic recovery, and address economic scarring. It also aims for medium-term socio-economic agenda which will create more, high-quality, and green jobs for Filipinos.

“The recent past and the COVID-19 pandemic have beset the macroeconomic environment with challenges and a series of external shocks. Inflation has accelerated in recent months due largely to significant increases in international prices of oil and key commodities,” the resolution reads.

“Still, the economic growth momentum remains firm as demonstrated by the strong 2022 first-quarter gross domestic product (GDP) growth at 8.3 percent. However, the recovery process from the impact of the pandemic is still ongoing amid elevated uncertainty in the international economic environment,” it said.

Romualdez said the legislative agenda shall be guided by targets set in the 2022-2028 Medium-Term Fiscal Framework.

They are: (1) 6.5-7.5 percent real GDP growth in 2022; 6.5-8 percent real GDP growth annually between 2023 to 2028; (2) 9 percent or a single-digit poverty rate by 2028; (3) 3 percent National Government deficit to GDP ratio by 2028; (4) Less than 60 percent National Government debt-to-GDP ratio by 2025; (5) At least $4,256 gross national income per capita to attain upper middle-income status.

The House also committed to “prioritize legislative measures that are consistent with the long-term socioeconomic vision as embodied in Ambisyon Natin 2040, as well as the 2022-2028 Medium-Term Fiscal Framework, for a prosperous society.”

This would be consistent “with the achievement of macroeconomic stability and inclusive economic development while continuing to allocate resources for health, disaster risk management, food and social security, digital economy, local government support, private sector participation, and growth-inducing expenditures.”

“These are attainable goals, but we need to discuss in the budget framework how we can achieve the goals this year and every year since,” Salceda said.

“We also need to raise the necessary revenues through both tax reforms and through tax collection efficiency and better enforcement. The implicit assumption behind the MTFF is that by 2028, we can achieve 17.6% revenue-to-GDP,” he said.

“I am already discussing with the economic managers the possibility of enacting tax reforms now but deferring implementation to when we begin exceeding our pre-pandemic growth momentum.”

In his sponsorship speech, Salceda said the MTFF is an international best practice.

“Some of our best neighbors and comparators are already doing that. Indonesia, Thailand, and Korea have it in their statutes. Malaysia, Singapore, and Japan do it regularly in their budgets,” the solon said.

“The ultimate purpose is to touch base. This helps us find common ground and a macro-fiscal ‘north star’ as we navigate the budget deliberations,” Salceda said.

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