President Duterte trusts his economic managers

The Philippine economy is flourishing thanks to solid foundations. It is possible & # 39; paused & # 39; when economic growth slowed to 6 percent in the second quarter of 2018, but it remains resilient during the trade war between the US, China and the member states of the European Union and the upheavals in world financial markets. .

Economic managers must be commended for the ship's straightening at a time when inflation seems to be accelerating and merchandise is swelling because of rising imports and slower exports.

The economic managers of the country, led by Minister of Finance Carlos Dominguez III, Bangko Sentral and Pilipinas, Governor Nestor Espenilla Jr., Minister of Economic Planning Ernesto Pernia, and Minister of Budget Benjamin Diokno, fulfill their duties well and it is a good case that President Rodrigo Duterte keep the team away.

With President Duterte allowing the economic managers to run the economy with hardly any interference, the Philippines has remained well within the growth target that has been set over the medium term. Our debt and other financial ratios are very manageable and remain consistent with our economic growth trajectory.

However, the ordinary newspaper reader may be alarmed by the fact that the country's balance of payments (BoP) has expanded by 168 percent in the first seven months of the year to $ 3.7bn due to a deficit of $ 1.38 billion a year ago was registered. The BoP data may not be placed in a negative context.

The BoP deficit rose largely as a result of the ever-increasing trade balance gap, which in turn is caused by the continuing increase in imports of raw materials and capital goods. Increased imports, especially capital goods, will later translate into a larger production of factories that support economic growth.

The deficit on the trade balance, according to the latest statistics from the Philippine Authority for Statistics, amounted to $ 19.1 billion in the first half, an increase of 62.6 percent from the difference of $ 11.7 billion a year earlier . Imports rose 13.2 percent in the six months to $ 51.8 billion, while exports fell 3.8 percent to $ 32.7 billion.

Despite the gaping BoP deficit, gross international reserves stood at 76.72 billion dollars from the end of July. The Bangko Sentral says that the figure "represents more than sufficient liquidity buffer and equals 7.4 months of import of goods and payments of services and primary income."

The level of foreign exchange reserves of the country is a given that monitors the international financial community. The reserves indicate that a country is able to repay its foreign obligations and we have no problem with that despite the "worsening" BoP. The international reserves, according to the Bangko Sentral, are equal to 6.1 times the foreign debt of the country on the basis of original maturity and 4.1 times on the basis of residual maturity.

Global debtor Moody's Investors Service is not thrilled by the country's BoP performance. The credit profile of the government of the Philippines [Baa2 stable]says it is supported by a large and fast-growing economy and sustained profits in debt sustainability, partly as a result of income reforms.

It added strong domestic demand and the limited dependence of the economy on foreign funding sources protected the Philippines from the direct impact of abrupt changes in the global macroeconomic and financial environment.

The economic managers also closely monitor the expenditure ratios related to gross domestic product and generated revenues. Public expenditure is programmed to reach P3 833 trillion by 2019, or 19.8 per cent of GDP, and to rise to p5.362 trillion in 2022, or 20.7 per cent of GDP. The government expects expenditure to be one of the most important factors for the growth of the Philippine economy in the light of an extensive infrastructure program.

The planned budget deficit is set at P624.0 billion for 2019, rising to P774.3 billion in 2022. As part of the GDP, the gap is equal to 3.2 percent in 2019, an increase over the previous target of 3 per cent.

Dominguez has reassured people that "the government will continue to pursue fiscal discipline, even if it is aiming for a high level of productive spending paving the way for high and inclusive growth."

A sound income program must of course support the spending program. The revenue collection is expected to reach P3,208 trillion by 2019, equivalent to 16.6 percent of GDP, before rising to p4.588 trillion in 2022, or 17.7 percent of GDP.

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