Budget and Taxes

SONA 2023: investments, revenues and climate July 27, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/07/27/536090/sona-2023-investments-revenues-and-climate/ During his second State of the Nation Address (SONA) on Monday, July 24, President Ferdinand R. Marcos, Jr. highlighted economic recovery via high GDP growth, increasing the employment rate, investments, revenues, and spending on agriculture modernization; the decrease in inflation rate, other economic factors. For this piece, three subjects will be tackled — investments, revenues, and climate change. Note also that this month, this writer has made a four-part assessment of the economic performance of the administration’ first year: budget deficit and employment (part 1), inflation and interest rates (part 2), trade and investments (part 3), and overall GDP and agriculture (part 4). INVESTMENTS AND MAHARLIKA FUND The President said in his SONA, “For strategic financing, some

Year 1 of Marcos Jr.: GDP growth and agriculture July 20, 2023 | 12:02 am My Cup of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/07/20/534979/year-1-of-marcos-jr-gdp-growth-and-agriculture/ (Last of 4 parts) This column attempts to make an independent assessment of year 1 economic performance of the Marcos Jr. administration. Part 1 discussed the budget deficit and unemployment, part 2 assessed inflation and interest rates, part 3 tackled trade and investments, and this part 4 will review the overall GDP performance and the agriculture sector. Regular readers of this column will have some basic economic data when President Ferdinand Marcos, Jr. delivers his second State of the Nation Address (SONA) on Monday. I wrote a nine-page paper for Stratbase-Albert Del Rosario Institute (ADRi) that was released yesterday, “An Assessment of the Economic Performance of the Marcos Jr. Administration During its First Year,” Stratbase-ADRi Occasional Paper, July 2023

Year 1 of Marcos Jr.: Trade and investments July 18, 2023 | 12:01 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/07/18/534463/year-1-of-marcos-jr-trade-and-investments/ (3rd of 4 parts) In this part 3 assessment of the year 1 economic performance of the Marcos Jr. administration, we will discuss trade and investment. Part 2 (July 11) discussed inflation and interest rates and Part 1 (July 4) discussed the budget deficit and unemployment. Last week the Philippine economic team went on a US-Canada Non-Deal Roadshow (NDR) with a series of meetings with American investors, like US asset management firms and investors on July 10 at the Citi Headquarters in New York City. Then the 8th Philippine Economic Briefing (PEB) and first in Canada, held on July 13 in Toronto. The Economic Team is composed of Budget Secretary Amenah F. Pangandaman, Finance Secretary Benjamin E. Diokno, NEDA Secretary Arsenio M. Balisacan, and Bangko Sentral ng Pilipinas (BSP

Year 1 of Marcos Jr.: Inflation and interest rates July 11, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/07/11/533308/year-1-of-marcos-jr-inflation-and-interest-rates/ (2nd of 4 parts) There were two pieces of good news reported by the Philippine Statistics Authority (PSA) last week. One, that the inflation rate further decelerated to only 5.4% in June 2023, from 6.1% the previous month. It was also 6.1% in June 2022. Two, the unemployment rate further declined to only 4.3% of the labor force in May 2023, from 4.5% the previous month and 6% in May 2022. The underemployment rate was also down to only 11.7% of the labor force in May 2023, from 12.9% the previous month, and 14.5% in May 2022. The Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO) headed by the Secretaries of the Department of Finance (DoF), the NEDA, and the Department of Budget and Management (DBM), is producing good results from their efforts. Doin

Year 1 of Marcos Jr.: Budget deficit and unemployment July 4, 2023 | 12:03 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. (Part 1 of 4) https://www.bworldonline.com/opinion/2023/07/04/531968/year-1-of-marcos-jr-budget-deficit-and-unemployment/ The Ferdinand Marcos, Jr. administration turned one year old last week on June 30. This column will produce a four-part assessment of the economic performance of the Marcos Jr. administration leading to the second State of the Nation Address (SONA) on July 24. The goal of this informal exercise is to assess if the first year performance so far would help the Philippines achieve fast growth — create more jobs, expand the production of more goods and services, further industrialize and modernize the Philippines in the medium- to long-term. Eight economic sectors, two per article, will be assessed this month: the budget deficit, unemployment, inflation, the interest rate, GDP growth, agriculture, trade, and investment. CASH OPERATIONS REPORT Last

Financing sustained growth: NAIA privatization June 27, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/06/27/530776/financing-sustained-growth-naia-privatization/ (Last in a four-part series) The Philippines’ huge outstanding public debt — only P8.22 trillion in 2019, jumping to P13.81 trillion in 2022 and P13.91 trillion in April 2023, and these numbers exclude guaranteed debt — remains a significant fiscal drag that can inhibit the country from sustaining fast growth. Over the last three years, the government has been forced to borrow abroad to supplement domestic borrowings. Foreign debt securities to finance the annual budget deficit were priced with interest rates of 4% to 10%, rather high. This is also reflected in the jump in the 10-year government bond, which was only 3.9% in late June 2021 but 6.3% in late June this year. Other Asian countries, excluding India and Indonesia, only have 0.4% to 3.9% (see the table). NAIA M

The law of diminishing marginal utility and public policy June 22, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/06/22/529956/the-law-of-diminishing-marginal-utility-and-public-policy/ One of the important contributions of Economics in public policy is the marginal (or extra, additional, incremental) analysis in the increase in cost and revenues, satisfaction and dissatisfaction, welfare and “diswelfare.” And this applies to both private (household, corporate, civil society) and public (national, local government) institutions. The “law of diminishing marginal utility” means that all else being equal or constant, as consumption of a product or service increases, the marginal utility or satisfaction or happiness derived from each additional unit declines. Or, the more units of an item are used or consumed, the less satisfaction one gets from each additional unit consumed. An example would be going to an eat-all-you-can restaurant

FDI in the Philippines and the energy mix June 20, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/06/20/529550/fdi-in-the-philippines-and-the-energy-mix/ Last week, the government economic team held the 7th Philippine Economic Briefing (PEB) in the Singapore Fullerton Hotel. The first PEB in Singapore was held on Sept. 9, 2022 and led to investment pledges of $6.5 billion. SOURCES OF FDI Singapore is the most appropriate place to invite more foreign direct investments (FDIs) into the Philippines because it was the country’s number one source of FDIs in 2020-2022, larger than Japan, and six times larger than the US (see Table 1). Among the declarations made at the Singapore PEB were the following. Finance Secretary Benjamin Diokno said “this is the moment”; Budget and Management Secretary Amenah Pangandaman said “the Philippines will not only be the darling but also the Sweetheart of Asia.” Secretary Arsenio Balisacan of the Natio

Financing sustained growth: Tax reforms June 15, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/06/15/528674/financing-sustained-growth-tax-reforms/ (Third of four parts) The government economic team or the members of the Development Budget Coordination Committee (DBCC) will hold another Philippine Economic Briefing (PEB) today in Singapore with a clear goal of attracting more foreign investments to create more jobs in the country. The economic team also went to Singapore and Jakarta for the first PEB in the second week of September last year. Very likely among the important announcements to be made by the team will be on the recently enacted economic liberalization measures like the Public Service Act Amendment and Retail Trade Liberalization, the proposed Maharlika Investment Fund, and taxation policies. I checked the revenues/GDP ratio of some ASEAN countries and saw that the ratio is generally similar among them — 15-18% in 2

Financing growth, fiscal discipline and Maharlika fund June 13, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr.  https://www.bworldonline.com/opinion/2023/06/13/528160/financing-growth-fiscal-discipline-and-maharlika-fund/ (Second of four-parts) Last week, the Development Budget Coordination Committee (DBCC) or economic team kept the Philippine growth targets of 6-7% this year and 6.5-8% for 2024-2028, having considered the risks of El Niño, global trade tensions and value chain disruptions, among other factors. Among their assumptions are inflation of 5-6% in 2023 and 2-4% in 2024-2028; peso-dollar rates of P54-P57 this year and P53-P57 in 2024-2028; Dubai crude at $70-$90 per barrel in 2023-2024 and $60-$80 in 2025-2028. I think these growth targets are achievable and should be maintained. I can think of at least three reasons. One, the Philippine growth momentum is way above the pace of neighboring Asian economies, and triple or quadruple those in G7 countries. Out of

Financing sustained growth: MUP pension reform June 6, 2023 | 12:02 am My Cup Of Liberty By Bienvenido S. Oplas, Jr. https://www.bworldonline.com/opinion/2023/06/06/526885/financing-sustained-growth-mup-pension-reform/ (First of four parts) This is the first of a four-part series on the subject of financing sustained growth. We start by looking at the cash operations report as of April this year which the Bureau of the Treasury (BTr) released last week. HIGHER REVENUES, ANOTHER BUDGET SURPLUS The good news is that tax revenues have reached P400 billion for the first time, while expenditures have not increased by a proportional amount — so we experienced a big fiscal surplus of P67 billion in April, compared with a deficit of P274 billion in 2020. I computed the comparable January-April totals from 2019 to 2023 — the good news is that the deficit this year is the lowest since 2020, and while borrowings are still at P1 trillion, this is lower than in 2020. National Government (NG) spendi