Phl now ripe to pursue reforms – Dominguez

The Department of Finance (DOF) said the Philippines is now ripe for undertaking major reforms including the introduction of a new comprehensive tax reform package.

Finance Secretary Carlos Dominguez said the Duterte administration would introduce major reforms such as a tax reform package anchored on the reduction of corporate and personal income tax rates.

“This is a good time to make our systems right. We need big reforms that can steer the country toward a better future. The economy is rising. Investor confidence is high. Public support for the new President is unprecedented. The national debt has been tamed. There is consensus for the reforms,” he said.

Dominguez pointed out President Duterte has the political will to reform the system and political capital to drive the country’s economy at a pace unthinkable in the previous administration.

“We will seize the opportune convergence of factors at this time: a dynamic growth rate, robust growth potential, a stable currency, a stable fiscal profile, and determined national leadership,” he said.

The country’s gross domestic product (GDP) growth accelerated to seven percent in the second quarter from the revised 6.8 percent in the first

quarter due to election related spending.

This brought the GDP expansion to 6.9 percent in the first half from 5.5 percent in the same period last year. Weak global demand and low government spending pulled down the GDP growth to 5.8 percent last year from 6.1 percent in 2014.

“We are estimating that our yearend growth will be somewhere close to seven percent. At any rate, the economic team based its budget estimates on a 6.5 percent growth rate. We are projecting the same 6.5 percent to seven percent next year,” Dominguez said.

With the projected strong economic expansion, he explained the government could pursue policy and governance reforms.

“All things considered, we have very good conditions in which to introduce policy and governance reforms. We have enough headroom to raise our budget deficit level from two percent to three percent. That single percentage point will allow us to undertake programs to make our economic expansion a lot more inclusive. That is equivalent to about P150 billion additional spending,” he said.

The Duterte administration is raising infrastructure spending to ease congestion in Manila, decrease the cost of moving people and goods through the archipelago, boost tourism, and pump prime economic activity.