PH resilience is boosted by economic reforms.
According to Finance Secretary Carlos Dominguez, the Duterte administration’s reforms have enabled the nation to remain resilient in the face of the epidemic.
Dominguez compared the economy to a human body that needs to be healthy in an interview on state-run PTV-4.
“If you want to be disease-resistant, you must maintain a healthy lifestyle and exercise regularly. And this necessitates sacrifice. So, from 2016 to 2019, what we did was like exercising,” he added, alluding to the government-pushed tax changes that ultimately became law.
The Tax Reform for Acceleration and Inclusion (TRAIN) legislation, which exempts employees with yearly incomes of less than PHP250,000 from paying personal income tax, is one of these initiatives.
The same legislation placed excise taxes on sugary beverages, with the goal of reducing Filipinos’ use of sweetened beverages and lowering their risk of diabetes, among other things.
According to officials, the government saves money as a result of this legislation since fewer individuals, especially the poor, will need hospitalization, resulting in lower state costs.
Cigarette excise duties have also been raised.
Tax collections improved, allowing the government to raise revenues and provide more resources to infrastructure and social protection programs, among other things.
These actions, according to Dominguez, enabled the government to be in a strong financial position.
“Sadly, Covid (coronavirus disease 2019) struck. Now, since we were in such good financial shape, it didn’t impact us as much as it did other countries,” he said.
Credit rating agencies have lowered the ratings of many nations as a result of the pandemic’s effect, but the Philippines has so far been spared.
A credit rating reduction puts a nation at a disadvantage in terms of its ability to borrow from financial markets. It also implies higher borrowing rates for the company.
Fitch Ratings maintained the Philippines’ investment grade rating of ‘BBB’ on July 12, but altered the outlook from stable to negative due to the pandemic’s economic effect on the local economy.
Because of the epidemic, Dominguez described the shift in ratings outlook as “natural.”
“We have a strong credit rating, which means we borrow on favorable conditions for ourselves so that our children and grandkids do not have to pay such exorbitant interest rates,” he said.
Due to the pandemic’s impacts, the domestic economy contracted by 9.5 percent in 2020, as measured by gross domestic product (GDP).
The contraction was 4.2 percent in the first quarter of this year.
As the economy reopens and recovery measures are undertaken, economic managers recently reaffirmed their 6 percent to 7% GDP growth goal for this year.