Where would we be without Dominguez?

THE official gross domestic product ( GDP) data for the second quarter, which is scheduled to be released today, Thursday, is likely to be shocking. After a somewhat unexpected contraction in the first quarter of the year ( revised downward from - 0.2 percent to - 0.7 percent Wednesday), it is anticipated the economy entered a deep recession in the April to June period as a result of the enhanced community quarantine or ECQ imposed on Metro Manila and other economically vital areas for much of that time.

This state of affairs is alarming under any circumstances, but it might be downright catastrophic if the nation’s finances were not in the competent hands of Finance Secretary Carlos Dominguez 3rd, and his counterparts at the Bangko Sentral ng Pilipinas ( BSP), the Bureau of the Treasury ( BTr) and the National Economic Development Authority. While other officials of the government have been subjected to sharp criticism for their handling of national affairs during the coronavirus disease 2019 ( Covid- 19) crisis — and in many instances, deservedly so — Secretary Dominguez has, with a minimum of fanfare, managed to keep the national finances on a reasonably stable footing in the face of some incredible challenges.

A large part of the relative soundness of the overall fiscal position now, in spite of severe constraints on government revenues, comes from Dominguez’s smart management of finances when things were “normal.” Although the country’s debt load was increased due to investment in the government’s Build, Build, Build infrastructure initiative, it was done so judiciously, leaving plenty of fiscal room for more borrowing if the need arose, which it most certainly did with the arrival of the Covid- 19 pandemic. The current debt of the country, now at something over P9 trillion, has caused a great deal of worry and criticism among the people, but the reality, confirmed recently by BSP Governor Benjamin Diokno, is that the government could take on several trillion pesos of additional debt if necessary, without exceeding the dangerous 50- percent debt- to- GDP ratio. Of course, everyone concerned hopes that will not be necessary and are taking steps to avoid that eventuality, but the option is still safely available.

Some of that debt is now held by ordinary Filipinos, thanks to the recent and highly successful roll- out of the Retail Treasury Bonds or RTB program, which was developed through the cooperation of the Department of Finance, BTr, BSP, Philippine Dealers’ Exchange and banking sector. For as little as P5,000, individuals can invest in government bonds using a smartphone app. The government benefits from receiving funds that can be immediately put to use for vital government programs, while individual Filipinos benefit from having an easy and secure means to earn from their savings.

Dominguez and his department have put as much if not more effort into plugging revenue leaks as in finding new sources of funding for the government. One of the finance chief’s key programs that he has been relentless in implementing is the fuel- marking program, designed to put an end to the rampant smuggling of petroleum products that costs the government between P27 billion and P44 billion per year in lost tax revenue. According to data presented by Dominguez on Monday, even with the ongoing pandemic, the value of marked fuel products reached P91 billion, or nearly 10.7 million liters, as of the end of July. Although the secretary himself admitted that the chaotic demand situation caused by the pandemic and measures to fight it makes it difficult to measure how the program has impacted fuel smuggling, the overall drop in demand and much tighter anti- pandemic security measures being employed suggest that almost all of the country’s fuel needs are now being met with marked products, potentially adding P20 billion per year to government coffers.

No one expected this pandemic, and not everyone has been satisfied with the government’s management of it. Under Secretary Dominguez’s guidance, however, the government’s fiscal position has been well- managed to meet immediate needs without completely mortgaging the country’s future.