Finance Secretary Benjamin Diokno said over the weekend the government’s sound fiscal policies will ensure a healthy financial system.
“Rest assured the Department of Finance stands ready to support the FMAP in safeguarding the health of our financial system through sound, responsive, and progressive fiscal policies,” Diokno said during the Fund Managers Association of the Philippines’ 16th annual convention at the Crimson Resort and Spa Boracay on March 11.
FMAP is an organization composed of local equity and fixed-income fund managers that guide the investing public through professional fund management that adheres to ethical standards and global practices.
Diokno said that amid the persisting global economic challenges, “a financially inclusive and vibrant economy is better equipped to absorb shocks and remains resilient in economic crises.”
He said the Philippine economic team had prepared three forward-looking plans that map out the trajectory for the next five years.
The Marcos administration’s 8-Point Socioeconomic Agenda lays out strategic interventions to address immediate concerns such as taming inflation, reducing economic scarring brought about by the pandemic and generating job opportunities.
He said over the medium term, the agenda is to create more, better quality and green jobs through higher investments in infrastructure, human capital development and digitalization.
These huge financing needs will be supported by the Philippines’ first Medium-Term Fiscal Framework which introduces reforms to enhance the fairness and efficiency of the tax system, improve tax administration mainly through digitalization and promote fiscal sustainability.
The MTFF will help the government exercise prudence in public spending in order for the country to sustain infrastructure spending by at least 5 percent to 6 percent of gross domestic product annually.
Diokno said through these strategies, the government aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025 and further down to 51 percent by 2028 while reducing the budget deficit to 3.0 percent of GDP by 2028.
“Right now, we’re ahead of this metric. Our debt-to-GDP ratio by the end of 2022 was 60.9 percent– lower than the government’s target of 61.8 percent,” he said.
The government’s budget deficit also narrowed down to 7.3 percent of GDP from 8.6 percent in 2021, and is below the target of 7.6 percent set in the MTFF.
The Philippine Development Plan 2023-2028 will work in synergy with the two frameworks as it integrates tried and tested strategies in the formulation and identification of policies, programs, and legislative priorities for the next few years.
Measures that will re-energize the capital markets, boost investor confidence and enhance financial inclusion will be implemented under the plan.
Diokno also cited the Real Estate Investment Trust which was a landmark legislation that proved to be a powerful tool for boosting property development in the country and opening reliable investment opportunities to Filipinos.
The DOF is also pushing for the Capital Market Development Act to deepen the domestic capital markets by building a sustainable corporate pension system.
Diokno said the participation of large investors such as pension funds would help expand and diversify the investor base and mobilize a long-term supply of capital that could support countless investment opportunities.
“Our efforts are gaining ground. But we will not be complacent. Financial markets are inherently risky, and risks are not directly visible. As such, I call on the FMAP to remain vigilant and proactive in strengthening the resilience of our markets through effective and efficient fund management,” Diokno said.