To Bangko Sentral ng Pilipinas Monetary Board Member, Dr. Benjamin E. Diokno;
Our partners from the academe: University of the Philippines - School of Economics, University of Asia and the Pacific, and Ateneo de Manila University;
My colleagues from various government offices, economists, researchers, policymakers, and international development partners, good afternoon!
Assalamu alaikum wa Raḥmatullahi wa Barakatuh.
First of all, thank you for participating in this policy dialogue organized by the Department of Budget and Management. Congratulations to our Budget Policy and Strategy Group led by our Principal Economist Dr. Joselito Basilio and Assistant Secretary Romeo Balanquit for bringing together the economic luminaries of the country for this dialogue that will help us navigate current challenges, explore potential fiscal strategies, and carve the country’s path towards economic stability and sustainable growth.
Fiscal Policy in Navigating Challenges
As you know, effective fiscal policy is crucial in stabilizing the economy, bolstering the country’s resilience to shocks, and achieving our economic targets.
We are lucky that during the start of this Administration, we have the Medium-Term Fiscal Framework in place, which allowed us to hit the ground running. And through the close coordination among the members of the Development Budget Coordination Committee (DBCC), we have emerged to become one of the fastest growing and most dynamic economies in the Asia-Pacific region today.
Macroeconomic Gains from Effective Fiscal Policies
Looking back, when the world grappled with the consequences of the COVID-19 pandemic, our country experienced a sharp decline in GDP, dipping to negative 9.5 percent in 2020. But through strategic fiscal expansionary strategies, such as stimulus packages, social protection subsidies, and investments in public infrastructure, we withstood the negative impact of the pandemic and even better, emerged as the fastest growing economy in the Asia Pacific Region, hitting 7.6 percent GDP growth in 2022.
With the continued implementation of various fiscal reforms and policies, I am pleased to report that the country continues to exhibit strong growth—positioning itself as one of the top performers in Asia. In the first half of the year, our economy grew by 6.0 percent despite external headwinds, now matching our pre-pandemic growth levels.
Recent typhoons and severe weather conditions caused our third-quarter growth to dip to 5.2 percent. Nevertheless, we will reinforce our prioritization of agriculture and climate action, both of which are already reflected in our Philippine Development Plan (PDP) 2023-2028, for a stronger fourth-quarter performance.
We are optimistic with the record-low inflation rate of 1.9 percent recorded just this September, the lowest since May 2020, mainly due to the big drop in rice inflation and reduced price of vegetables. And we are confident that the government remains on track as October inflation rate registered at 2.3 percent, further curbing the average inflation rate so far this year to 3.3 percent—well within the 2 to 4 percent target.
Our unemployment rate further declined to 3.7 percent in September from 4.0 percent in August. This brings the total number of employed Filipinos to 49.9 million, translating to 2.2 million new jobs on a month-on-month basis.
And inching towards achieving single-digit poverty levels by 2028, our poverty incidence has gone down to 15.5 percent in 2023, much lower relative to the 18.1 percent rate during the pandemic.
Medium-Term Fiscal Consolidation Plan
Given the above numbers, we are evidently on track to meeting our economic targets. Nevertheless, we must remain vigilant as to challenges that may hinder our desired economic and social transformation.
We will remain committed to our medium-term fiscal framework. Targets are [as follows]: 3.7 percent of deficit-to-GDP until the end of the Administration [and] a below-60-percent of debt-to-GDP ratio by 2026. The DBCC is also committed to ramping up our revenue efforts, which will increase by an average of 10.0 percent annually from 2025 to 2028.
On the expenditure side, disbursements will be sustained at a little over 20 percent of GDP for the entire plan period, reaching more than Php 7.6 trillion by 2028.
Reforms
Part of achieving sound fiscal management over the medium term is ensuring that key structural reforms are in place, enabling us to better achieve the country’s socioeconomic development goals.
Towards this end, we have launched the Public Financial Management (PFM) Reforms Roadmap 2024-2028, which seeks to ensure that we will practice accountability, efficiency, and transparency in managing our public finances.
This includes a game-changing blueprint for the digitalization of PFM processes through the adoption of the Integrated Financial Management Information System (IFMIS) across all government agencies. And I am happy to announce that we are launching the Budget and Treasury Management System (BTMS), which will be the core central system that will link and facilitate data exchanges between existing separate systems, before the year ends!
Another landmark reform capitalizing on digitalization is the New Government Procurement Act (NGPA). Dubbed as the biggest anti-corruption law in recent history, the NGPA institutionalizes electronic procurement and streamlines the procurement process, effectively reducing bureaucratic red tape and addressing corruption. With the recent approval of the revised GPPB Resolution, crafted upon extensive consultations with government agencies, we can now greenlight the pilot phase of the eMarketplace. It’s similar to Lazada and Shopee. Agencies can just open the website and just click “add to cart.” This will ensure that the system is working efficiently before nationwide implementation, enabling our agencies to seamlessly “add to cart” for unhampered government operations.
And in pursuit of fulfilling our commitments to the Open Government Partnership, we have ensured that our budget transparency is improved, and I am proud to share that we are now back [to being] No. 1 in Asia in Budget Transparency. We have also institutionalized Open Government, and we continue to dialogue with Civil Society Organizations as we strengthen our commitment to public participation in government—gearing up for the upcoming 2025 OGP Asia and the Pacific Regional Meeting, which I am pleased to announce will be hosted by the Philippines early next year.
In terms of fiscal management, the DBM has also directed agencies to identify bottlenecks in the execution of key programs and institutionalized the submission of periodic reports and preparation of catch-up plans to address underspending and to expedite the delivery of services to the Filipino people.
Towards a Stronger Fiscal Future
With these policies and programs laid out for the rest of the year and the coming years, we are confident that we will meet the country’s growth targets, laying the groundwork not only for short-term progress, but also and more importantly, for long-term prosperity.
However, we recognize that we must still constantly be on the lookout for innovative approaches tailor-fit to the country’s current needs—with the interest and welfare of the people as our top priority.
Hence, for this Conference, we are looking forward to hearing the fresh and innovative ideas that will come from your presentations, case studies, and in-depth discussions. The Filipino people are relying on us in steering the country’s trajectory towards our Agenda for Prosperity, through improved fiscal health, which will situate them in an environment that allows and encourages them to fulfill their dreams and aspirations.
After seeing all the abstracts for presentation and the roster of participants today, I believe everyone will agree that we are also blessed to have such brilliant minds in the government, development partners, and the academe. I have seen a variety of topics related to debt management, public spending, tax reforms, and poverty reduction—matters held urgent and important by the DBCC. With this, we are ready to listen.
I am personally excited to see all these ideas come into fruition, be integrated into our fiscal governance, sustain the gains of the Administration, and leave their lasting impact that will benefit the future generations of Filipinos—fulfilling our promise of a Bagong Pilipinas.
Thank you very much.
Wabillahi Tawfiq Wal Hidaya, Wasalamu alaikum wa rahmatullahi wa Barakatuhu.
END
