‘Next admin to inherit a better economy’

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said the next administration is set to inherit a much better economy with a sustained gross domestic product (GDP) growth of six to seven percent.

In an interview with ABS-CBN News Channel, BSP Governor Benjamin Diokno said the administration of President Duterte has put in place much needed tax and economic reforms over the past few years.

“To me the administration will be inheriting a sound tax system, which we reformed many times under this administration. It will also be a recipient of many structural reforms,” Diokno said.

The current administration, the BSP chief said, has pushed the crucial comprehensive tax reform package (CTRP), including the enactment of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act and RA 11534 otherwise known as the Corporate Reform and Tax Incentives for Enterprises (CREATE) Act.

Likewise, President Duterte also signed RA 11595 or an act amending the Retai Trade Liberalization Act, RA 11659 or an act amending the Public Service Act, and RA 11647 or an act amending the Foreign Investments Act.

The Philippines exited the pandemic-induced recession that stretched through five quarters with a GDP growth of 5.7 percent last year after shrinking by 9.6 percent in 2020.

For 2022, economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) are expecting a faster GDP growth of seven to nine percent this year before stabilizing at six to seven percent next year.

“In other words this administration will inherit a much better economy than what we inherited from the previous one,” Diokno said.

However, the BSP chief said the next administration should come up with a fiscal consolidation package as the pandemic padded the country’s debt-to-GDP ratio to 60.5 percent from 39.6 percent, as the national government borrowed heavily to finance its COVID-19 response measures.

“But at the same time, it is faced with the increase in public debt as a result of the pandemic,” Diokno said.

Despite the increase, Diokno explained   the country’s debt-to-GDP ratio remains “pretty much” manageable as long as the country’s economy continues to expand between six and seven percent in the next few years.

“That said, this administration’s first order of business, I think, is to present to the people and to the international community a what they call a fiscal consolidation program in the next three years at least,” the BSP chief said.

Diokno said the next administration should also continue the Build Build Build program and investments in human resources.

He also cited the need to rationalize the benefits of retired military personnel.

“Lastly, and this is the elephant in the room, is rationalizing the pension benefits of retired military personnel,” Diokno said.