Philippines targets to bring down deficit-to-GDP ratio to 3%

  • The incoming administration aims to reduce the share of the budget deficit to the country’s domestic output as measured by the gross domestic product (GDP) and lower the poverty rate to one of 10 Filipinos during the term of President-elect Ferdinand Marcos Jr., according to incoming Finance Secretary Benjamin Diokno.
  • Diokno said in an interview over One News’ ‘The Chiefs’ that the incoming economic managers intend to bring down the deficit-to-GDP ratio to 3% through a fiscal consolidation plan.
  • The outgoing Bangko Sentral ng Pilipinas (BSP) governor said he agrees with Finance Secretary Carlos Dominguez III that there is a need for a fiscal consolidation plan to reduce the ratio of the budget shortfall to the GDP that is now in the neighborhood of 7%-8%.
  • “Our target is that by the end of the term of President Marcos, the deficit-to-GDP ratio will be in the neighborhood of 3%. That is where we were before the crisis,” Diokno said.
  • Diokno said the target of trimming the deficit-to-GDP ratio to 3% is doable even with the current tax system. However, Diokno said they would look into the recommendations made by President Duterte’s economic team to determine which are doable.
  • The proposal of the outgoing economic managers includes new or higher taxes, prioritizing infrastructure spending, while slashing budgets on non-priority sectors.
  • “We have actually made a lot of reforms to the tax system. On the basis of that as long as the economy grows at 6%-7%, we won’t have any problems,” Diokno said. Diokno said the current tax system gives the government the right level of revenues.

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