Blue economy, tax policies to boost Phl economy over 6% — IMF

The International Monetary Fund (IMF) is recommending that the Philippines tap its marine resources or the blue economy and adjusts government funds effectively to ensure higher economic growth.

The IMF is projecting that the Philippine economy would grow from 5.8 percent this year to 6.1 percent in 2025, and 6.3 percent in 2026 due to manageable inflation and the government’s massive infrastructure plan with 186 projects worth a total of P9.6 trillion.

“Growth will be supported by an acceleration in consumption as food prices ease and by an increase in investment sustained by continued emphasis on public investment and more accommodative financial conditions,” the IMF said in its 2024 Article IV Consultation with the Philippines economic report.

The IMF estimated the inflation rate in the country to settle at 3.2 percent this year, 2.8 percent in 2025, and three percent in 2026, all of which are within the government’s two to four percent target band.

Excise tax measures

To ensure higher economic growth, the IMF said the government must implement excise tax measures, manage tax incentives, and better tax collection and distribution to critical projects.

“Priority areas include upgrading infrastructure, making significant investments in healthcare and education, addressing land fragmentation and low productivity in the agricultural sector, and enhancing governance,” IMF said.

In January, Department of Finance Secretary Ralph Recto said he was not looking to introduce new taxes this year on consumer goods which usually include excise taxes for augmenting government revenues.

However, Recto supports the Single-Use Plastic Bags Tax Act which will require at least P100 per kilogram excise tax on thin plastics for additional government revenue of P31.5 billion, along with its impact on waste and carbon emissions reduction.

He also pushes for tax adjustments under the Real Property Valuation Reform which aims to update property zonal values, and the Motor Vehicle User Charge.

Recto added finance officials have been consulting firms and briefing lawmakers on the Rationalization of the Mining Fiscal Regime which aims to reduce tax tiers and ensure fair shares in mining revenues.

Ocean fishing and tourism-related services

IMF also recommends enhancing tourism-related offerings using its marine resources.

“Ocean fishing and tourism-related services activities contributed an average of 30 percent and 11 percent of the total growth in ocean-based activities, respectively. In 2019, the EMERGING Database shows that the Philippines lags its Southeast Asian neighbors in terms of fishing but performs strongly in tourism-related services,” IMF said.

IMF’s data showed the Philippines’ tourism services sector saw a better growth in 2019, with a 3 percent share in gross domestic product, higher than Indonesia’s less than 1 percent, Malaysia’s 2.6 percent, Thailand’s 1.5 percent, and Vietnam’s 2 percent.

IMF said the government must improve Philippines’ 2023 Ocean Health Index score of 58 out of 100 or below the global average of 73

“The country needs to be more sustainable in maximizing its ocean and marine resources such as tourism and recreation,” the global institution said.

“Multi-agency collaboration is needed in the development, implementation, and monitoring of policies to ensure that tourism development protects the marine environment, safeguards coastal communities from economic shocks, and alleviates poverty,” IMF added.