18sep23-‘Inclusive growth program on course’

POSTSCRIPT / September 23, 2018 / Sunday

‘Inclusive growth program on course’

By FEDERICO D. PASCUAL JR.

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SINCE you’re reading this, you must have survived somehow last Friday’s clash of partisans during the commemoration of the declaration of Marcosian martial rule on Sept. 21, 1972.

You may want to go to Sunday mass today, forgive your enemies and pray for our nation going through a trial. The hakot crowds can kiss their rally earnings, students return to class tomorrow, policemen back to their beats, and the rest of us to the status quo ante.

Whether you were among those screaming “Never Again!” or those subscribing to that odd line of one broadsheet to “Never Forget” that event 46 years ago that allegedly “transformed and saved our country,” continue to stay awake.

The administration’s economic managers, meanwhile, gave assurances in a comprehensive briefing Tuesday at the Central Bank that the Duterte program on poverty reduction and inclusive growth is on course.

Finance Secretary Carlos Dominguez, one of the speakers, said: “While the inflation rate kicked up in the first quarter of this year, we do not see this as a structural infirmity. It is a transient phenomenon that all of government is now mobilizing to deal with decisively.”

With no contrary data, and partly because of fatigue, we have chosen to just hang on in the meantime. We tell ourselves that those inflation bumps of 6.4-percent size and the feeling that the country is drifting before being swamped by a tsunami are just illusion.

Aside from Dominguez, those who briefed a group of economists and businessmen included Cabinet secretaries Ernesto Pernia (NEDA), Arthur Tugade (DoTr), Mark Villar (DPWH), and BCDA president Vince DIzon. The foreign press was invited.

Not being a foreign correspondent, we borrowed the notes of businessman Eduardo H. Yap, chair of the national issues/affairs committees of the Management Association of the Philippines and the Financial Executives Institute of the Philippines.

From Yap’s summary, we culled these statistics for the first semester of 2018 versus the same period in 2017 (unless otherwise indicated):

* Investment-led growth measured by capital formation at 27.4 percent of Gross Domestic Product vs 21.3 percent during the past 16 semesters.

* 21-percent increase in total revenue collections over the past seven months.

* 90 percent of taxpayers have more money from hefty personal income tax cut.

* Tobacco excise tax collection of $50 million a month; $600 million collected from Mighty Corp. alone.

* Tax on sugar-sweetened beverages almost $2 million a day collected.

* 2.34-percent deficit/GDP vs 3 percent target.

* 47-percent increase in infrastructure spending. Target has been 7 percent/GDP vs 2.6 percent average in the past 50 years.

* Net Foreign Direct Investment surged 42.4 percent to $5.8 billion vs $4 billion over same period last year.

* 42-percent debt/GDP by end 2017. Target is 38 percent by 2022.

* Official Development Assistance pledges — $9 billion each from China and Japan; $1 billion from South Korea.

* $934.75-million first tranche ODA loan from Japan for the Mega Manila subway at 0.10-percent interest payable in 40 years inclusive of 12-year grace period.

* Poverty reduction on track from 21.6 percent in 2015 to 14 percent in 2022.

* Improved capacity to execute priority projects as shown by national government expenditures up 23 percent in the first seven months.

Dominguez traced the administration’s poverty reduction and inclusive growth program being “on course” to:

1. Consistent year-on-year high economic growth over 6 percent creating more jobs and business opportunities.

2. Tax break for low-income wage earners and micro businesses under TRAIN-1 means higher disposable income for consumption and savings.

3. Human development programs under the national budget for Conditional Cash Transfer assistance (“Pantawid Pamilyang Pilipino Program” or 4Ps) to the poor, and such social services as in health and education (including free tuition in state universities and colleges).

 Phl joining upper-middle income club

PERNIA said in the briefing that with the economy’s having maintained its growth momentum despite a slight slowing down early this year, the Philippines is poised to join the ranks of upper-middle income countries by end 2019.

The socioeconomic planning secretary said the country’s growth, boosted by structural transformation, is increasingly being driven by investments, instead of consumption.

He said: “Growth is increasingly being driven by investments vis-à-vis consumption on the demand side, and by the industry sector (especially manufacturing) relative to the service sector on the supply side. The sources of economic growth have diversified. Such qualitative change enables the economy to sustain growth and generate more stable and quality jobs.”

He predicted that by 2019 the Philippines would have a per capita income of more than $4,000, pushing it to the status of an upper-middle income country (with China, Malaysia, and Thailand) that by World Bank definition has a per capita income of $3,896 to $12,055.

The Philippines is now classified as a lower-middle income country along with Myanmar, Laos, Vietnam, Indonesia and India. In the region, Taiwan, Singapore and Japan are classified as high-income economies with per capita incomes of $12,056 or more.

In a symposium in April in Tuscon, Arizona, Pernia said the country’s external position “remains favorable, characterized by strong flows of foreign investments, remittances, healthy current account, and declining external debt” (23.4 percent in 3Q2017).

He said: “With greater fiscal space, the government has been able to increase investments in human and physical capital. For infrastructure, we will raise spending (cash basis) from about 4 percent of GDP in 2017 to over 6 percent by 2022, or an investment of $130 billion (P6.8 trillion) over six years, making this administration’s term the “golden age of infrastructure” in the Philippines.”

 

(First published in the Philippine STAR of September 23, 2018. Follow the author on Twitter as @FDPascual.

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