Apply more effective fiscal measures

According to Finance Minister Benjamin Diokno, the Marcos administration’s fiscal consolidation framework will include fair and efficient policies to support economic growth.

Diokno, who took over finance after taking over the Bangko Sentral ng Pilipinas under the previous government, said they would “propose a broad tax system in which all Filipinos contribute their fair share.”

“In terms of efficiency, our proposal covers areas where tax laws and administrative policies need to meet requirements, such as taxes on digital services,” he added in his speech during a handover ceremony at the finance department on Wednesday evening.

“Grow the economy and almost everything else will follow,” Diokno also said, noting that this would help reduce the deficit, for example, so the government wouldn’t have to borrow as much.

A growing economy, he continued, also means higher taxes and incomes, as well as the creation of high-quality jobs, which in turn will help reduce poverty.

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Inclusive economic growth will be driven by three key strategies, starting with continuing the risk management and vaccination practices of the previous administration.

“We have learned that a massive vaccination program that keeps the economy open and imposes detailed lockdowns only when necessary will allow Filipinos to continue to earn a living while remaining safe from severe Covid-19 infections,” he said.

Second, the Marcos administration will continue to invest in infrastructure and people, following the example of former President Rodrigo Duterte. To keep workers and students healthy and competitive in the long term, it will also fund investments in education and health care.

Finally, Diokno said the new administration will take action to maintain the country’s solid economic foundations, maintain fiscal discipline and build on the existing reform momentum.

“I know full well that the way forward will be difficult. But I also see a lot of room for the Philippines to move forward…,” he added.

In a separate interview, Diokno said that the national government would be “opportunistic” about foreign borrowing.

“Let’s put it this way. We will act opportunistically. If there is a good opportunity to take out a foreign currency loan. We will do it,” he told reporters during the handover ceremony, when asked about the possibility of another global bond issue.

The national government has set a reduced gross financing ceiling of 2.74 trillion pesos for this fiscal year. External borrowing was fixed at 560.57 billion pesos and domestic borrowing at 1.91 trillion pesos.

The latest data from the Treasury shows that between January and April this year, the government borrowed a total of 1.18 trillion pesos. External borrowing amounted to 267.90 billion pesos compared to domestic financing of 915.49 billion pesos.