ECONOMIC HANDLING PRAISED
The Duterte administration’s prudent fiscal management strategy has positioned the Philippines as among the countries “in good shape” to meet the challenges spawned by the coronavirus disease 2019 (COVID-19) pandemic and bounce back from this global health crisis, according to the World Bank’s newly named director for the country.
With the Philippines’ debt of equivalent to just 40 percent the size of its economy at the time the coronavirus pandemic struck, its government has enough fiscal space to address the emergency triggered by the COVID-19 global crisis, said Mr. Ndiame Diop, the newly designated country director of the World Bank for Brunei, Malaysia, the Philippines and Thailand.
“We are looking at the Philippines and comparing to other countries in the region and looking at the initial condition, what is the economic condition when the pandemic hit.… I think the prudent fiscal management of the past few years has really positioned the country to be among the countries that are really at the forefront in terms of capacity to respond on the fiscal side,” Mr. Diop said in a recent virtual meeting with Finance Secretary Carlos Dominguez III and members of the Duterte administration’s “Build, Build, Build” infrastructure team.
The Philippines’ debt-to-GDP (gross domestic product) ratio before COVID-19 plunged the world into a global economic downturn was at only 39.6 percent in 2019.
Dominguez has underscored the conservative fiscal policies of President Duterte as a critical factor in maintaining the Philippines’ high credit worthiness, which has enabled it to secure borrowings from development partners for the government’s COVID-19 response efforts at the least cost.
Mr. Diop said other countries facing national debts in relation to their respective GDPs of 60 to 70 percent will face a “tough” period ahead. “So I think the good shape in which the Philippines is under this crisis positions it very, very well going forward,” he added during the meeting held via the Zoom teleconferencing tool.
Dominguez, for his part, thanked Mr. Diop and the World Bank for providing the government policy advice on how to maintain the country’s strong fiscal position, which has resulted to, among others, the enactment of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
TRAIN, which raised state revenues in 2019 to more than 50 percent than it was before the administration of President Duterte, helped provide the government the fiscal space required to meet the massive state funds needed to fight COVID-19 and provide relief to the poor and other virus-hit sectors, Dominguez said.