Danica M. Uy (Business World)
THE GOVERNMENT released the official version of its medium-term development goals with Saturday evening’s online publication of the Philippine Development Plan (PDP) 2017-2022, which includes a significant increase in the share of tax revenue relative to gross domestic product (GDP).
Outlined in the plan are the targets set for revenue generation to account for 17.7% of the country’s GDP by 2022 from a baseline of 15.9% in 2016.
In particular, tax revenue has been set a target of 17% of GDP by 2022 from 14.2% in 2016.
To do this, the government is implementing reforms to the tax system to improve revenue generation.
“The proposed tax policy reform shifts to a simpler, fairer, and more efficient tax system characterized by lower rates and a broader base,” according to the plan, adding that reforms to tax policy will correct inequities and will only work if accompanied by reforms in tax administration.
The government also wants to raise primary spending to 18.8% of GDP by 2022 from 15.5% in 2016 brought about by strong infrastructure spending of 7.4% of GDP by 2022.
This year, the government plans to “undertake strategic measures” to increase public spending to at least 5.3% of GDP, compared with the Department of Budget and Management’s (DBM’s) forecast of 5.4% in 2017.
“Undertake strategic measures to ensure that the annual public spending on infrastructure will be further increased to at least 5.3% of GDP in 2017 and possibly to 7.4% of GDP in 2022,” read the PDP.
The government also wants to ramp up spending on research and development from 0.14% of GDP in 2013 to 0.50% by 2022.
“Meanwhile, the total social expenditure gap is estimated to be equal to about 3.0% to 4.0% of GDP,” read the PDP.
Given the plan to increase spending over the next six years, the national government is expected to incur a fiscal deficit of 3.0% of GDP from 2016’s 2.1%.
As for trade, merchandise exports are targeted to reach $61-62.2 billion by 2022 from $32.8 billion in 2016 while services exported are projected at $61-68.6 billion by 2022 from $24 billion in 2016.
“The global economy is seen to remain weak, with average growth rising only slightly from 3.2% in 2008-2015 to 3.6% in 2017-2021,” according to the PDP as the government expects global export volume to grow only 3.9% in 2017-2022 from 3.0% recorded in 2008-2015.
“There is a growing trend toward inward-looking policies and protectionism. Such a trend may make it difficult to engage in preferential or multilateral trade agreements and to expand market access. It also poses a challenge to established international trade rules,” the plan read.
The trade deficit widened 61.66% to $2.564 billion last year with merchandise imports rising 14.2% to $81.159 billion while merchandise exports dropped 4.4% to $56.232 billion.
The drop in merchandise exports lagged the 3.0% increase projected by the Development Budget Coordination Committee (DBCC) for budget purposes, though the decline was milder than the 5.27% fall recorded in 2015.
Agricultural output is also targeted to grow 2.5-3.5% by 2022.
The PDP identifies an average of 7-8% growth in GDP in the medium term and the overall poverty rate is targeted to decline from 21.6% to 14%, while poverty incidence in rural areas is expected to decrease from 30% in 2015 to 20% in 2022.
Unemployment is also targeted to decrease from the current 5.5% to 3-5% by 2022.
Two weeks ago, President Rodrigo R. Duterte approved the plan during a National Economic and Development Authority (NEDA) Board meeting at the Malacañang Palace.
“… The printed copies will be available in another couple of weeks for distribution,” said Socioeconomic Planning Secretary Ernesto M. Pernia on Friday.