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Benjamin Diokno, secretary of the Department of Finance (DOF), claimed that the Philippines’ strong macroeconomic fundamentals are reflected in Fitch Ratings’ improved outlook for the nation.

After the Fitch rating agency on Monday confirmed the nation’s “BBB” credit rating and changed its outlook from “negative” to “stable,” Diokno remarked.

A rating of “BBB” indicates that default risk is not expected to be high and is above the minimum investment grade.

Additionally, it shows the nation’s capacity to fulfill its financial obligations.

“The Philippines’ improved outlook to stable is a testament to the country’s robust macroeconomic fundamentals, as evidenced by the economy’s strong growth performance in 2022 at 7.6 percent and 6.4 percent in the first quarter of 2023,” said Diokno.

According to the study, Fitch’s greater confidence in the Philippines’ return to robust medium-term growth following the pandemic, sustained decreases in the country’s debt-to-gross domestic product (D2G) ratio, and the country’s sound economic policy framework are all factors that contributed to the outlook’s upgrade.

Over the medium run, Fitch expects the nation’s gross domestic product (GDP) to rise over 6 percent.

“Fitch’s most recent rating action underscores the robust economic activity that can be encouraged by the country’s enhanced investment climate. The consistent improvement of our labor and job conditions further supports the nation’s progress, according to Diokno.

Diokno reaffirmed the commitment of the Finance department to ensuring the stability of the macroeconomic fundamentals of the nation through responsible fiscal management.

“We will continue to rely on structural reforms that will increase opportunities and boost the nation’s productivity, especially through larger infrastructure spending. These investments would be supported as fiscal sustainability is encouraged by the full execution of the six-year Medium-Term Fiscal Framework, he said.

The Passive Income and Financial Intermediary Taxation Act, Package 4 of the Comprehensive Tax Reform Programme, Value-Added Tax (VAT) on Digital Service Providers, Excise Taxes on Single-Use Plastics, and Excise Taxes on Pre-Mixed Alcohol are among the proposed tax revenue measures under the framework.

The House of Representatives and Senate are now deliberating and discussing these proposals, which are anticipated to go into effect in 2024.

The Development Budget Coordination Committee (DBCC) previously announced additional tax measures to support the reforms in the Medium-Term Fiscal Framework, such as the imposition of higher excise taxes on sweetened beverages, the rationalization of the motor vehicle road user’s tax, and reforms to the mining fiscal regime.

According to Diokno, the government is also pursuing reforms to expenditures, such as the rightsizing programme for the federal government and changes to the Military and Uniformed Personnel (MUP) pension system.

Diokno said that by accelerating the implementation of infrastructure projects and reducing the effects of international uncertainties, the government will ensure that economic development is maintained with the restoration of the Economic Development Group (EDG).

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