“Dominguez stressed the country’s fiscal position “is strong” and “would continue to be so in the foreseeable future.”
The government vowed on Tuesday to observe fiscal discipline even while it aggressively spends under the multi-year infrastructure buildup program designed to supercharge the economy and sustain growth.
This requires the Department of Finance (DOF) to work closely with the Bureau of the Treasury (BTr) to ensure the government’s borrowing policy remains cost-efficient to provide it with enough resources to fund the infrastructure buildup program and other priorities.
“We assure our people that the government remains steadfast in its commitment to fiscal discipline. The improved revenue collections are channeled to productive spending that will clear the way towards inclusive economic growth,” Dominguez said at the 173rd meeting of the Development Budget Coordination Committee (DBCC) at the Department of Budget and Management (DBM) office in Manila.
Dominguez stressed the country’s fiscal position “is strong” and “would continue to be so in the foreseeable future.”
He added the economic managers have adjusted the forecast budget deficit from 3 percent of local output or the gross domestic product (GDP) to 3.2 percent through 2019 to maintain the momentum of the buildup program.
Keeping the budgetary shortfall in check allows the government to allocate scarce public funds to such other critical sectors as defense, education or health.
Such discipline also allows the economic managers to borrow only when necessary even though government debt as a fraction of GDP has fallen over a nine-year period to only 42.1 percent as of December last year from 54.7 percent.
For the first five months this year, for example, revenue collection already reached P1.19 trillion, higher by 19 percent year-on-year and also 7.4 percent above the target, Dominguez said.
From January to May, the Bureau of Internal Revenue (BIR) also collected P828 billion, or 15.5 percent higher than the same period last year and 3.1 percent higher than the target.
During the same period, the Bureau of Customs (BoC) reported collecting P229.3 billion pesos, a 31.2 percent increase from the same period last year and 2.4 percent above target.
“For these, we credit the administrative reforms undertaken by both agencies as well as the beneficial effects of the TRAIN (Tax Reform for Acceleration and Inclusion) Law passed late last year,” he said.
To ensure efficient borrowing, the year’s so-called borrowing mix had been reset to 75 percent domestic from 65 percent originally and to 25 percent from external sources from 35 under the old proposal.
“The larger proportion of domestic borrowing in the 2019 mix will help us hedge better against foreign exchange risks,” Dominguez said.