World Bank cites Philippines prudent fiscal strategy

MANILA, Philippines — The government’s “prudent” fiscal management strategy  has put the Philippines in a good position to respond to the global health crisis, according to the World Bank.

According to Ndiame Diop,  World Bank country director for Brunei, Malaysia, the Philippines and Thailand,  the Philippines’ low debt-to-gross domestic product (GDP) ratio before the health crisis struck the globe has provided the country enough fiscal space to address the health emergency.

“We are looking at the Philippines and comparing to other countries in the region and looking at the initial condition, what is the economic condition when the pandemic hit.… I think the prudent fiscal management of the past few years has really positioned the Philippines to be among the countries that are really at the forefront in terms of capacity to respond on the fiscal side,” Diop said.

On the other hand, Diop  said other countries with debt-to-GDP ratios of 60 to 70 percent will face a “tough” period ahead.

“So I think the good shape in which the Philippines is under this crisis positions it very, very well going forward,” he said.

For his part, Finance Secretary Carlos Dominguez said the Duterte administration’s conservative fiscal policies is an important factor in maintaining the Philippines’ credit worthiness.

He said this has enabled the Philippines to secure borrowings from development partners for the government’s COVID-19 response efforts at low cost.

The finance chief also thanked the World Bank for providing their expertise on how to maintain the country’s strong fiscal position, which   resulted in the enactment of the Tax Reform for Acceleration and Inclusion Act, among others.

He also assured the World Bank that the Duterte administration is fully committed to carry out its  massive infrastructure program amid the pandemic.

“We look at the Build Build Build program as our main means of (stimulating) the economy, putting money in the pockets of the people, while at the same time constructing the needed infrastructure. We are going to be very reliant on the ‘Build, Build, Build’ program to bring us out of this recession,” Dominguez said.

Dominguez and Budget Secretary Wendel Avisado have committed to ensure the “transparent, judicious and efficient” use of funds extended by the World Bank in support of the government’s COVID-19 response and Build Build Build program.

So far, the World Bank has already provided $1.2 billion in concessional financing assistance to the Philippines to help contain the spread of COVID-19 and provide emergency relief to sectors most affected by the pandemic.

This includes the $500 million Third Disaster Risk Management Development Policy Loan, $500 million Emergency COVID-19 Response Development Policy Loan, and the $200 million additional loan for the Social Welfare Development and Reform Project II.

Diop said that including the COVID-19 assistance, the World Bank has delivered $1.9 billion in loans to the Philippines over a one-year period from June 2019 to June this year.