Securing a credit rating upgrade is only secondary to the government’s “paramount concern” of reducing the poverty incidence in the country, Finance Secretary Carlos Dominguez 3rd told debt watchers in a meeting held in Washington, D.C..
In his remarks before a meeting with credit rating agencies on the sidelines of the World Bank-International Monetary Fund Group Annual Fall meeting, Dominguez said the new administration’s 10-point socioeconomic agenda aims to rapidly reduce poverty incidence from 26 percent to 17 percent over the next six years.
Dominguez said the government’s 10-point agenda is meant to accelerate spending on pro-poor and growth-friendly programs to sustain the economy’s upward trajectory and ensure inclusive growth.
“While we greatly value a ratings upgrade to full investment grade, recognizing the hard work we have put in to achieve fiscal consolidation, this is only of secondary importance,” he pointed out.
Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s (S&P) Global Ratings have all assigned the Philippines an investment grade rating.
S&P, however, said recently that an upgrade from the minimum investment grade rating is unlikely within the two-year rating horizon.
“In the economic plans we lay down, rapidly reducing poverty rates ranks first priority,” Dominguez stressed.
“Our people expect this. Our government fully intends to meet that expectation. We do not plan on failing the poorest of the poor,” he added.
He noted the Duterte administration has committed 40 percent of public spending to poverty alleviation.
“This goal cannot be accomplished without sustained economic growth,” he said.
“We intend to make our economic growth more inclusive. We will achieve this by investing more in our human capital, closing the infrastructure gap that raises the costs of production and trade, and transforming our agriculture so that it becomes a driver of growth rather than the poverty trap it has been,” Dominguez said.
Infrastructure spending would be increased to 5 percent of the GDP, as a way to help correct uneven economic progress in the Philippines, he said.
“The sustainability of our economic expansion makes [these]economic investments necessary,” he added.
To raise needed funds, the Department of Finance is pursuing reforms in tax policy and administration that will discourage evasion and avoidance, broaden the tax system’s narrow base and make it more equitable.
“We have likewise proposed reforms in tax administration intending to make it simpler, fairer and more effective. By doing so, we expect to broaden the tax base and actually produce more revenues than before,” he said.
The DOF chief assured the international community that the Philippines will maintain macroeconomic policies that have helped sustain growth, provide investors a business-friendly environment, cut red tape, eliminate corruption, and shift from consumption-driven to investment-led growth.
“The Philippines will maintain fiscal discipline as a paramount concern. It took us three decades since the debt crisis of the mid-eighties to finally put our fiscal house in order. Those were three long decades when, under several structural adjustment programs, we cut spending on public services and new infrastructure,” he said.