DOF Prepares Budget Consolidation Plan – Manila Bulletin
The Ministry of Finance (DOF) said the national government will embark on a path of fiscal consolidation with the initial goal of bringing the budget deficit to its pre-pandemic level by 2025.
Finance Secretary Carlos G. Dominguez III said he had entrusted Under Secretary of Finance Gil S. Beltran and Deputy Secretary Ma. Teresa S. Habitan with the task of developing a roadmap for consolidation. government tax.
But with less than a year of the end of the Duterte administration’s tenure, Dominguez said the implementation of their fiscal consolidation strategy would be passed on to their successors.
Besides Dominguez, whose term ends with President Duterte, DOF veterans Beltran and Habitan are also expected to retire before the end of this year.
“We are preparing a budget consolidation plan, but it is not going to come out all at once,” Dominguez told reporters. “We will do this through periodic broadcasts, periodical editorials [opinion editorials]. “
“It is an evolving plan, which we will leave to our successors in the next administration,” he added.
But based on the first preliminary estimates presented by Beltran, the national government’s fiscal position could return to its pre-pandemic level by 2025. However, there is a big caveat to achieving this outlook.
“If we get all these measurements [remaining bills under the comprehensive tax reform program] past, ”Beltran said. “There is a big if.”
“It could be even earlier if the next administration is quick. If they’re as fast as this administration, then we can even do it in 2024, ”Beltran said.
In 2019, the government’s budget deficit stood at just 3.4% of gross domestic product (GDP). The DOF expects the ratio to remain above the pre-pandemic level in the medium term, 2024 at 5.3%.
The pandemic-induced fiscal responses have also led to a sharp increase in public debt, which Dominguez says will be reduced through a combination of robust and sustained economic growth and a tighter budget deficit.
Beltran, the DOF chief economist, said the government’s debt-to-GDP ratio will stand at around 60% over the medium term, but improving productivity growth will be a key factor in bringing it down to a low. pre-pandemic level of 41 percent.
“We expect the economy to soar as soon as the blockages are lifted because the factors of production are there, it just can’t budge. Once you remove the roadblocks, the checkpoint and the restrictions, the economy will boom, ”Beltran said.
Dominguez echoed his assessment as chief economist, saying: “We have emphasized, all the time, that you know this pandemic did not destroy the factors of production, it was just in quarantine. Once that is released, we’ll have a very, very healthy pace. “
By 2025, the finance chief said the DOF expects government budget and debt levels to return to their 2016 to 2019 trend.
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