Development efforts under the Marcos administration will be sensitive to the wants and needs of the Filipino people, economic managers declared earlier this month.
"As we move forward with the enduring effects of the pandemic and geo-political conflicts, the government — as always — shall prioritize the welfare of the Filipino people," they said in a July 8 joint statement following a Development Budget Coordinating Committee (DBCC) review of the government's macroeconomic assumptions, fiscal program and growth targets.
"The overall goals are to create more quality jobs, reduce poverty incidence, and achieve inclusive and resilient growth all through 2022 until 2028," they added.
The DBCC, which determines the government's overall economic targets, expenditure levels, revenue projections, deficit levels, and financing plans, is composed of the Finance, Budget, Socioeconomic Planning, and central bank chiefs, with the Office of the President having oversight.
NEDA to push reforms
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Prior to the DBCC review, Socioeconomic Planning Secretary Arsenio Balisacan said the National Economic and Development Authority (NEDA) was committed to pushing required changes to improve the nation's economic performance.
"[D]espite all the headwinds and economic pains confronting us in the near term, we can aim to do even better and surpass the country's previous performance, bringing it closer to its long-term development anchor: the AmBisyon Natin 2040," he said during turnover ceremonies last July 4.
The NEDA, he added, will improve its proactive involvement with stakeholders such as the President and policymakers in Congress and the Executive. Measures "may need to be adjusted at a moment's notice," he said, adding that "current and future economic challenges require careful analysis and planning to be quickly translated into dynamic, timely, implementable, and economically sound interventions with effective monitoring and evaluation."
In particular, Balisacan said the NEDA would collaborate closely with Congress to hasten the passage of priority legislation and structural reforms that can improve access to critical goods and services. Implementation of the National ID system will be sped up and the agency will also work with other government offices to digitalize transactions so that targeted assistance to the underprivileged and vulnerable groups is facilitated.
Balisacan, who previously headed the NEDA during the administration of Benigno Aquino 3rd, said his office would support a culture of openness, transparency, and professionalism with regard to the direction of national economic policies, plans, and initiatives.
He stressed the significance of swiftly finishing and putting into effect the implementing rules and regulations (IRR) of the recently passed Corporate Recovery and Tax Incentives for Enterprises Law as well as liberalization reforms such as amendments to the Public Service Act, Retail Trade Liberalization Act, and Foreign Investments Act.
Finance eyes equitable taxation
Finance Secretary Benjamin Diokno, meanwhile, said the Marcos administration's fiscal consolidation framework would include equitable and effective policies. The Department of Finance (DoF), in particular, will "propose a broad-based tax system where all Filipinos contribute their fair share," he said during turnover ceremonies last month.
"On efficiency, our proposal covers areas where tax laws and administrative policies need to catch up, such as taxes on digital services," he continued.
"Grow the economy and almost everything else will follow," said Diokno, who was Bangko Sentral ng Pilipinas (BSP) governor during the Duterte administration, noting that this would help reduce the deficit so the government won't have to borrow as much.
Inclusive economic growth will be promoted through three key strategies, starting with the continuation of risk management and vaccination methods used by the previous administration.The Marcos administration will also continue to invest in infrastructure and the people, following in the footsteps of former President Rodrigo Duterte. In order to maintain the long-term health and competitiveness of workers and students, it will also finance investments in education and health care.
Budget targets priority financing
Budget Secretary Amenah Pangandaman, for her part, said the President had given the Department of Budget and Management (DBM) instructions on which programs and agencies should receive priority financing under the P5.2-trillion 2023 national budget.
Marcos' focus areas, she said, are agricultural and food security; climate change adaptation; economic recovery, improved healthcare and education; enhanced infrastructure projects, including digital infrastructure; use of renewable energy sources; strengthened tourism and job creation; and sustainable development, among others, with the goal of economic reconstruction.
"Agriculture is very important to him, education, and we have to be consistent with the five to six percent for the infrastructure sector as percent to GDP (gross domestic product)," Pangandaman told reporters earlier this month.
One of the five sectors with the largest budgets for the upcoming fiscal year is agriculture, she said. This year, the combined budget given to the Department of Agriculture and the National Irrigation Authority is P102.5 billion, the seventh largest.
Budget utilization rates will be taken into account in preparing the 2023 outlay and Pangandaman said they were also proposing to rightsize government agencies, which will decide which of the 187 government agencies and government-owned and -controlled businesses with more or less two million employees can be streamlined through merger, restructuring or abolition.
"Its (rightsizing) overarching objective is to have a small bureaucracy that is agile and responsive in the modern era. This program will fix those agencies that have repetitive functions or overlapping functions," she claimed, adding that the money saved can be used to fund important projects.
Bangko Sentral focused on inflation
With surging inflation seen as the economic team's most pressing concern, Bangko Sentral Governor Felipe Medalla said monetary authorities would be working to rein in prices.
"Amid signs of recovery from the impact of the Covid-19 pandemic, the global economy will be confronted by headwinds from Russia's invasion of Ukraine, which can be expected to have continued uneven knock-on effects on domestic inflation and supply chain dynamics," he noted earlier this month.
Ongoing policy normalization among advanced economies will be a further challenge, Medalla said, as this could lead to tighter global financial conditions, higher market volatility, and a rebalancing of global capital flows.
"[B]oth the EU (European Union) and the US (United States) are not just raising policy rates, they are also winding down quantitative easing. This will be very challenging for us at the central bank," he noted.
Medalla, who helmed the NEDA during the Estrada administration, said that "while the headwinds confront the economy, our best policy stance is to remain focused. We need to keep our pencils sharp and we need to keep our ears closer to the ground."