Budget and Taxes

*  BusinessWorld , Dec. 26, 2022. ----------- Here is this column’s assessment of important macroeconomic events this year especially in the fiscal and monetary sectors, five global and five national. Covered are the major economies in the world arranged by region, and biggest GDP size per region. 1. G7, China, and Russian growth declined significantly. The Group of Seven (G7) industrialized countries — the United States of America (US), Canada, Japan, Germany, the United Kingdom (UK), France, Italy — renewed their growth slowdown this year after a modest recovery last year. And for the first time since 1991 or three decades ago, China this year will grow below 6%, aside from 2020’s global contraction. Russia will have another contraction as a result of the various sanctions against it after its invasion of Ukraine. But most ASEAN (Association of South East Asian Nations) countries will have faster growth this year than last year. 2. G7 countries have hit 37 to 70 years inflation r...

* BusinessWorld , December 12, 2022. -------------- This column continues to monitor many economic issues and developments. There are 10 topics tackled here. 1. Public debt has reached P14 trillion Last week, the Bureau of the Treasury released fiscal data for October 2022. The budget deficit has reached P1.1 trillion, interest payment alone is P43.3 billion/month average and likely to reach P520 billion by end of this year. Total outstanding public debt has reached P14 trillion, actual plus guaranteed. The public debt has been rising by P2 trillion/year from 2020 to 2022 or three years straight, not a good fiscal condition. The debt should significantly decline starting next year. Control should be on the spending side by the national government. 2. Inflation has reached 8%, a 14-year high Also last week, the Philippine Statistics Authority (PSA) reported that November inflation was 8%, a 14-year high. This is indeed high, but taking the average for 2022, we have a 5.6% inflation rate...

* BusinessWorld , December 5, 2022. ------------ At the  BusinessWorld  Economic Forum on Nov. 29 at the Grand Hyatt Manila in Bonifacio Global City in Taguig, Finance Secretary Benjamin Diokno outlined in his keynote speech an optimistic growth trajectory for the Philippines, the overall fiscal resources and debt reduction needed, and investment liberalization policies that have been institutionalized. He also briefly mentioned the establishment of a state-owned sovereign wealth fund (SWF). THE MAHARLIKA INVESTMENT FUND (MIF) The MIF, the Philippines’ SWF as proposed by the House leadership under House Bill 6398, ‘has attracted mostly negative reactions from researchers and corporate players in the country. See for instance these reports and columns in  BusinessWorld : “Medalla voices caution over plans to create $4.9B sovereign fund” (Dec. 2), “PHL not ready for sovereign wealth fund — analysts” (Dec. 5), “The Maharlika Wealth Fund,” Yellow Pad by Filomeno S. Sta. Ana I...

* BusinessWorld , Nov. 28, 2022. -------------- The  BusinessWorld  Economic Forum (BWEF) 2022 today, Nov. 29, has as its theme, “Forecast 2023: Opportunity in Uncertainty.” I want to contribute to the discussion on economic forecast and projections in relation to the recently concluded big annual conference, the UN Framework Convention on Climate Change (UNFCCC) 2022 or 27th Conference of Parties of UNFCCC (COP 27) in Egypt that ended on Nov. 19. PROJECTIONS 2022 AND 2023 The Philippines had the deepest economic contraction in Asia in 2020 at -9.5%, followed by a mild recovery of 5.7% in 2021. This year, it is on the way to having the fourth fastest growth in East and South Asia at around 7.8%. The multilaterals, especially the ADB through its Asian Development Outlook (ADO) September 2022 Update, and the IMF World Economic Outlook (WEO) October 2022 Update, have bad and low projections of only 6.5% Philippines growth this year, even if they knew that growth in quarters ...

* BusinessWorld  Nov. 21, 2022. ---------- Today and tomorrow I am attending the Pilipinas Conference 2022, organized by Stratbase ADR Institute, held at the Ayala Museum in Makati City. I thank Stratbase president, friend, and fellow BusinessWorld columnist Dindo Manhit, for the invitation. Among the Keynote Speakers of the two-day conference are Department of Budget and Management (DBM) Secretary Amenah Pangandaman on Nov. 21, and Finance Secretary Benjamin Diokno on Nov. 22. This morning, Secretary Pangandaman spoke about “Open Government and Digitization Efforts of the DBM.” Among the things she said are: building a CSO (certified security officer) desk in the DBM to directly link the public to the agency, a P12.47-billion budget for ICT (information and communications technology) and digitalization programs and projects in 2023 for the digital transformation of the government’s procurement process, and diminish human discretion in government transactions. These are good initia...

* BusinessWorld  Nov. 7, 2022. --------------- Last week, the big national news was the leap in the country’s inflation rate to 7.7% in October from 6.9% in September, according to the Philippine Statistics Authority (PSA). Meanwhile, the big international news was the high October inflation in Europe, with Germany hitting 10.4%, Italy with 11.9%, and so on. The Philippines now is one of four Asian economies with 14-year high inflation rates, the other three being Singapore, Thailand, and Taiwan (see Table 1). Practically all of these countries’ central banks have raised their interest rates to fight high inflation, and inflation is not tamed yet, suggesting the policy is not working or working only mildly. High inflation means that demand is higher than the supply of goods and services. It also means that the money supply is high relative to commodities supply — there is more money chasing fewer commodities. To really fight inflation, non-monetary policy measures must be done. One...

* BusinessWorld  October 31, 2022. With a generally bad economic environment globally, especially in Europe and China, it is important that the Philippines should do more investment promotion roadshows abroad and institute business-friendly domestic policies. The goal is to attract many companies leaving Europe, China, and even the US, while keeping investors that are already here. There were four Philippine Economic Briefings (PEB) done already by the economic team — in Jakarta and Singapore on Sept. 6 and 7, New York City in Sept. 22, and Washington D.C. in Oct. 15. These are good initiatives, with the economic team talking face to face with big potential investors in big financial centers like Singapore and New York. Last week, on Oct. 26, Budget Secretary Amenah Pangandaman and Finance Secretary Benjamin Diokno met with business leaders of the US-ASEAN Business Council (US-ABC) and reiterated the recent market-oriented reforms that are conducive to foreign investors. Then, on O...

* BusinessWorld  October 24, 2022. -------------- Today is a special day for me and I want to thank, appreciate, and mention certain groups and people who have helped me all these years. But before that, I want to mention the Asia-Pacific Economic Cooperation (APEC) Finance Ministers Meeting (FMM) held on Oct. 19 and 20 in Bangkok, Thailand. This seems to have escaped the coverage of many local business reports. The period 2020-2022 have been years of severe fiscal challenges for practically all countries around the world. Finding new revenues, cutting certain expenditures and subsidies, reducing borrowings while controlling inflation and encouraging fast growth are multiple challenges that responsible governments must address. Finance Secretary Benjamin Diokno attended the APEC-FMM and in his panel on “Digitalization for Fiscal Policy and Efficient Tax Collection,” he mentioned that the Philippines’ online filing and payment even improved collections amid the pandemic — a 5% incre...

* My article in  BusinessWorld  last Oct. 17. ---------------- On Oct. 7, I was interviewed on the BusinessWorld Live program of One News, Cignal TV which is hosted by very articulate broadcasters Danie Laurel and Jes delos Santos. The topic was about the impact of the OPEC+ decision to cut their combined oil production by 2 million barrels per day (mbpd), from 43.8 mbpd until this October to 41.8 mbpd by November. Projected global oil demand is 100 mbpd. Towards the end, they asked me for my assessment of President Ferdinand Marcos, Jr.’s first 100 days, I said that on a scale of one to 10, 10 being the highest, I would give him a seven overall. I would add now that if we focus on economic policies, I would give him an 8.5. For three reasons. One, the quick formation of the administration’s economic team — Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla, Finance Secretary Benjamin Diokno, Economic Planning Secretary Arsenio Balisacan, Budget Secretary Amenah Pangand...

* My column in  BusinessWorld  last October 10. ---------------- Four important events that occurred last week: the Energy Regulatory Commission (ERC) dismissed the rate hike petition of the power companies of San Miguel Corp. (SMC); the continuing threat of blackouts was highlighted; the jump in the inflation rate; and, the government’s cash operations and debt payment information were released. ERC’S DISMISSAL OF SMC POWER COMPANIES PETITION Last Monday, the ERC published its decision denying the petition of SMC for a rate hike for its two power plants. See these reports in BusinessWorld: “Meralco vows to prevent termination of SMC deals” Oct. 5), “SMC studies legal options after rate hike denial” (Oct. 6), and, “SMC plans to sell power to WESM after rate-hike denial” (Oct. 7). For me the main issue that the ERC has to grapple with is not the projected higher electricity rate hike if the SMC petition was not granted. The main issue is rule of law and sanctity of contract. If...