Effective governance and improved fiscal management are essential to sustain economic growth in Asia and the Pacific region, including the Philippines, the United Nations Economic and Social Commission for Asia and the Pacific (Unescap) said.
“Effective fiscal management, backed by improved governance, improve long-term economic prospects and help address social and environmental concerns,” Dr. Shuvojit Banerjee, economic affairs officer at Unescap’s Macroeconomic Policy and Financing for Development Division, said during a presentation of the flagship report “Economic and Social Survey of Asia and the Pacific 2017” in Makati City on Monday.
Unescap highlighted the importance of effective governance and fiscal management, given the high demands on fiscal policy to address the diverse challenges to sustainable development.
The commission is forecasting Philippine growth at 6.9 percent this year, the same as last year’s. The government target is for the gross domestic product (GDP) to grow by 6.5 percent to 7.5 percent.
Economic expansion has been accompanied by rising income inequality with inadequate creation of decent jobs in the region, which trails the world in social protection coverage.
Unescap noted that developing economies like the Philippines also use twice as many resources per dollar of GDP as the rest of the world.
To address these challenges, Unescap calls for effective governance, in particular a proactive fiscal policy through productive investments in infrastructure, social protection and resource efficiency.
“Given the increasing demands on fiscal policy, how governance reflects the mobilization and allocation of fiscal resources warrants greater attention,” Banerjee said.
Unescap recommends that structural reforms could complement fiscal policy and help increase potential output.
The report finds that when institutions are weak, inequalities tend to increase and the pace of poverty reduction declines. The quality of governance also affects environmental outcomes, as reflected in varying capacities to make and apply environmental rules and safeguards, and initiate ecological innovation and technological transfer.
“Enhancing transparency and accountability in public fiscal administration is fundamental to improving the quality of governance and achieving better fiscal management,” Banerjee said.
Reacting to the findings of the report, Philippine Institute for Development Studies President Gilbert Llanto said Unescap has pointed out the critical role of better governance and effective fiscal management in long-term growth.
“This is a distinct contribution based on data and empirical evidence, and we thank Unescap for this,” he said during the same forum.
Llanto cited one of the steps that the Philippine government is now taking to sustain economic growth is through serious aspirational goals under the Filipino 2040 vision.
The vision details the aspirations of Filipinos for themselves and the country for the next 25 years. These were drawn from the main findings of 42 focus group discussions with various sectors, including marginalized groups, as well as a National Economic and Development Authority-commissioned nationwide survey that involved 10,000 respondents.
The results showed that Filipinos envision a Philippines where all citizens are free from hunger and poverty, have equal opportunities, and are enabled by a fair and just society that is governed with order and unity.
“Two critical policy initiatives are the tax reform package and efforts toward more efficient public spending,” Llanto noted.
The House Committee on Ways and Means approved the substitute measure that will consolidate the Department of Finance-endorsed House Bill 4774, which contains the first package of the Comprehensive Tax Reform Program.
The Department of Budget and Management earlier said the government has streamlined the release of funds to line agencies, reformed the Implementing Rules and Regulations of the Procurement Law for better efficiency and transparency, as well as leveraged technology for improved project monitoring and have mounted capacity-building efforts to professionalize the bureaucracy.
Llanto said more effective governance on easing regulatory burden on firms and industries, and better social protection coverage will yield tremendous social dividends for the Philippines.