While recognizing that the country is indeed facing some headwinds, Finance Secretary Carlos Dominguez said the local business community should also take a look at the country’ strengths, which provide economic managers with tools to overcome these challenges.
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Philippines can overcome ‘temporary adversities’ — DOF
Mary Grace Padin (The Philippine Star) - September 19, 2018 - 12:00am

MANILA, Philippines — The Department of Finance (DOF) yesterday expressed confidence that the Philippine economy can overcome “temporary adversities,” such as high inflation and a widening current account deficit.

While recognizing that the country is indeed facing some headwinds, Finance Secretary Carlos Dominguez said the local business community should also take a look at the country’ strengths, which provide economic managers with tools to overcome these challenges.

“We would like to encourage everyone to take a long view of our situation as a country,” Dominguez said during a press briefing on the sidelines of the Philippine Economic Briefing at the Bangko Sentral ng Pilipinas.

“First of all, we do face twin deficits, a potential fiscal deficit and current account deficit. We also are experiencing elevated inflation rates. However, we should look at the strengths that the Philippines has,” he said.

For one, Dominguez said the country currently has a strong financial position given good revenue inflows.

In the first seven months, government revenue grew by 21 percent to P1.65 trillion from the P1.37 trillion in the same period last year.

The finance chief said the Philippines also enjoys good credit rating, as a result of adept fiscal and debt management.

He said the country’s debt-to-gross domestic product (GDP) ratio in 2017 was maintained at 42 percent, while debt service is currently only 13 percent of the annual budget.

“We have a lot of headroom in managing the fiscal deficit. There are always actions we can take there,” Dominguez said.

On the monetary side, Dominguez said the Philippines has a healthy banking system, and a robust gross international reserve.

“We have an exchange rate that is very flexible that moves as necessary with the tides. We also have very high domestic liquidity and in necessary, we can augment that liquidity by further reducing the higher reserve requirements,” he said.

With these, Dominguez said, “we have a lot of tools in our tool chest and we are very confident that we can overcome whatever temporary adversity we are facing.”

He said the Philippines is expected to sustain its economic growth this year, and continue being among the top performers in the region.

“The momentum is being sustained by policy and infrastructure reforms. Firm and decisive political leadership pushes forward these reforms,” Dominguez said.

Dominguez also said inflation, while elevated, is not seen by economic managers as a “structural infirmity.”

“It is a transient phenomenon that all of government is now mobilizing to deal with decisively,” he said.

DEPARTMENT OF FINANCE PHILIPPINE ECONOMY
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