DOF: Ordinary Filipinos saved P70B from Aquino's fiscal discipline

MANILA, Philippines - Amid criticisms that credit rating upgrades only benefited the rich, the Aquino administration said on Thursday that its budget discipline saved ordinary Filipinos nearly P70 billion.

"Fiscal sustainability has been an essential pillar in building our country's resiliency to external shocks and our stronger macroeconomic fundamentals," the Department of Finance (DOF) said in a statement.

"And this has concrete impact on the money we hold," the agency added.

By its estimates, the agency said local companies saved between P52 and P157 billion from low interest rate financing as a result of the Philippines's higher credit ratings.

Consumers, meanwhile, generated additional purchasing power worth P23 to P68 billion during the same period. The government saved an average of P118 billion as well.

Critics of the present government have downplayed the latter's dangling of a booming economy and 24 positive credit rating actions by saying these have not transformed to better lives for ordinary citizens.

According to census data, six-year average economic growth under Aquino was the fastest since the late 1970s, but a little over a quarter of the population remain poor.

But for Nicholas Antonio Mapa, economist at Bank of the Philippine Islands, it would "not be completely fair" to the outgoing government to say ordinary Filipinos did not benefit from its economic policies.

"The economy has seen progressive gains and I'm sure it has been felt by all in some shape or form," Mapa said in an e-mail.

"I do not subscribe to the view that the gains of Aquino have been pro-rich as I sit in traffic with streets (occupied by) Toyota Wigos and Fortuners alike. If for anything, it's the rise of the middle class," he added.

But Mapa also believed efforts to manage the budget deficit has been "overdone" with the government missing its spending targets for the past five years and the opportunity to build infrastructure and spend on social welfare.

"Our spending has been absolutely dismal," he said.

But the DOF disagreed. As far as the agency is concerned, wider budget space has allowed the government to boost budgets in education and infrastructure by 125 and 360 percent, respectively.

For the past six years, it also claimed to have more than doubled social services spending and improved health expenditures by more than threefold.

This, however, did not come without a price. Last year, the DOF opposed legislative moves to lower income tax rates, the second highest in Southeast Asia, for fear it would damage the country's credit standing.

Instead, Finance Secretary Cesar Purisima had called for a "holistic" approach to tax reform, which his agency repeated on Thursday with its own proposed tax amendments.

The comprehensive tax reform package, which will bring in at least P164.5 billion in additional revenues, will be handed over to the next DOF chief Carlos Dominguez for consideration.

"We cannot reverse these hard fought gains... While it is easier to pass popular spending bills without paying for them, fiscal responsibility means making tough calls to protect our future," the DOF said.