Higher public spending in 2016 in line with gov’t thrust

MANILA, Philippines -  The national government’s budget deficit of P353.4 billion in 2016, which was driven by higher public spending, is in line with the Duterte administration’s thrust to maintain the country’s high-growth pace and to attract more private investments, Finance Secretary Carlos Dominguez said yesterday.

In a statement, Dominguez said the deficit, which widened to 2.4 percent of the country’s gross domestic product (GDP), was “well within” the targets of the Duterte administration of 2.7 percent.

He said the national government is keeping its commitment to spend big on infrastructure, human capital and social protection to sustain high growth, attract investments and create jobs, thus, accelerating poverty reduction and transforming the Philippines into an upper middle-income economy by 2022.

According to Dominguez, the high public spending on these areas had helped the economy sustain its growth momentum in 2016. The country’s GDP expanded 6.8 percent in 2016, within the government’s set range target of six to seven percent.

“The Duterte administration’s decision to end years of public underinvestment and switch to higher deficit-spending mode has translated into more money spent on infrastructure, on education, health, skills training and other forms of human capital development, and on social protection for the poorest of the poor,” Dominguez said.

“This major policy shift, in turn, has allowed the NG to keep the domestic economy on the uptrend despite global market volatility,” he said.

Dominguez said last year’s budget deficit gives the government more reason to push for the approval of the Department of Finance’s Comprehensive Tax Reform Program.

He said the implementation of the tax reform plan would raise enough revenues for the country to “reverse years of official underspending.”

The first package of the CTRP was filed as House Bill 4774 by Representative Dakila Carlo Cua, who chairs the House ways and means committee.

It aims to lower personal income tax rates and reduce donor and estate taxes, while adjusting fuel and automobile excise taxes and expanding the value-added tax base.