PHL Economic Performance and Growth Strategies Discussed in Washington D.C. Forum

Secretary of Finance Carlos G. Dominguez delivers his remarks at the Banyan Tree Leadership Forum held at the Center for Strategic and International Studies (CSIS) in Washington, D.C. on October 13.

19 October 2017 WASHINGTON, D.C. - "We are optimistic and we are committed.  We are confident we have the correct strategy and moving in the right direction. We will continue to rely on your support in this grand effort to reduce poverty, build strong institutions and properly care for the most vulnerable among our people," thus ended the keynote speech of Secretary of Finance Carlos G. Dominguez at a Banyan Tree Leadership Forum of the Center for Strategic and International Studies (CSIS) in Washington, DC on October 13.

In the speech entitled "Our Partnership Stands on Solid Ground," the Secretary was upbeat about the economy, bullish about tax reform and the infrastructure program, and optimistic about the future, including of PH-US economic relations.

Secretary Dominguez began by declaring that the "Philippine economy is delivering the performance we anticipated, notwithstanding the political noise and a significant terrorist event in Mindanao. We have become an engine of growth for this part of the world."

He noted that GDP grew by 6.5% in the second quarter of 2017, and the economy could well meet the full-year target growth rate of 6.5% to 7.5%. He attributed the higher growth rate to several factors including foreign remittances that now account for about a tenth of Philippine GDP, which consequently keeps consumption demand high.

Looking to the future, Secretary Dominguez expressed the expectation for more foreign and domestic investments as the Philippines modernizes infrastructure and reforms its economic policies to spur business activity. 

"Investment-led growth will also make our domestic economy more inclusive and create quality jobs for our people. This will help bring down poverty incidence. Our entire economic strategy seeks to bring down poverty incidence from the current 21% to 14% by 2022," the Secretary said.

"The present government is pushing an ambitious infrastructure program that will increase roads, modernize our ports and airports and provide more mass transit for our cities. Called the Build, Build, Build program, we are seeking to match the infra investments of our neighbors such as Thailand and Vietnam. Investments in infra have high multiplier effects and our construction program will have expansionary effects on the economy. By the second quarter of this year, government spending accelerated by 7.1% year-on-year. This indicates greater absorptive capacity and a political resolve to get things done," he added.

The Philippine infrastructure program is looking to spend about 20 Billion USD per year through the medium term to build the urgently needed infrastructure. The Secretary emphasized that the increased spending will be funded by means of official development assistance packages as well as by expanded revenues expected from the comprehensive tax reform package.

The Secretary also informed the audience that the administration aims to keep the fiscal deficit to 3% of GDP with a view to growing the economy more rapidly without inviting a spike in inflation. He said that the fiscal discipline over the past few years enabled the country to achieve investment grade credit ratings, and there is every intention to maintain them. 

Notwithstanding increased infrastructure and social services expenditure, the Secretary believes that the inflation rate will be manageable between 2% and 4% through the medium term. He also said that as a matter of policy, an 80% to 20% ratio in borrowing will be maintained in favor of more domestic financing.

"Over the past few years, our GDP grew faster than our debt accumulation. Prudence dictates that we strive to maintain this trend. Fiscal stability is key to the sustainability of our economic expansion. We are further modernizing our capital markets to enable the consolidation of capital to support long-term growth," Secretary Dominguez assured the members of the Washington DC policy and business communities who came out to listen to his speech.

"We have significantly moved up the global rankings for the ease of doing business. We intend to build on these gains by working harder at reducing red tape, curtailing corrupt practices and limiting our negative list for investments. We have every interest in simplifying procedures for business. New investments and more business activities are what will liberate our people from poverty," Secretary Dominguez further emphasized.

At the end of his speech, Secretary Dominguez expressed the appreciation of the Philippine Government for the support extended by the US government in helping to modernize governance, improve policy formulation across the board and strengthen the rule of law in the country. 

"The support likewise covers winning peace and progress for Mindanao, facilitating trade and modernizing our agriculture. With the help of generous development assistance from the US, we have accomplished much. We hope improvements in our governance and a benevolent conjuncture of factors favoring stronger growth will encourage private investments from the US to take a much closer look at our economic prospects. In closing, let me say that the partnership between the Philippines and the US can only grow stronger in the coming period. This is a partnership tested by time and made more enduring by the shared values we hold," Secretary Dominguez stated.

In a substantive and robust discussion after the speech, Secretary Dominguez covered a wide range of questions that included those relating to President Duterte's priorities; PH-China economic relations; the infrastructure program and implementation schedules; federalism; prospects for Marawi's reconstruction; and PH-US economic relations.

The CSIS is a policy research institution specializing in, among others, US foreign policy, defense and security, economic integration and trade.

In a pre-departure statement earlier released by the Department of Finance, it was stated that in his CSIS remarks, the Secretary will provide American officials, diplomats and representatives of various sectors of the US economy "a better-rounded picture of where our country is and where we intend to go."

Secretary Dominguez and other economic managers were in Washington DC this week for the Annual Meetings of the World Bank and the International Monetary Fund. END

For more information, visit www.washingtonpe.dfa.gov.ph / www.philippineembassy-usa.org or https://www.facebook.com/philippinesusa @philippinesusa on Twitter

Secretary Dominguez answers various questions from the audience after his keynote speech at the CSIS Banyan Tree Leadership Forum on October 13.