THE ECONOMY ON THEIR MINDS President Marcos administers the oath of office to newly appointed Finance Secretary Ralph Recto (upper photo) and Secretary Frederick Go who will serve as special assistant to the President for investment and economic affairs, beside members of their respective families in Malacañang on Friday. —MALACAÑANG PHOTO
Finance Secretary Ralph Recto, who assumed his Cabinet position on Friday, said his main priority would be to raise P4.3 trillion in revenues this year as the administration targets expanded social services and create more jobs to continue the economic recovery despite the lingering impact of the pandemic.
Recto, a former senator who is leaving his post as a congressman of Batangas province, said the Bureau of Internal Revenue would be collecting P3 trillion, the Bureau of Customs P1 trillion and the National Treasury P300 billion.
READ: Inflation, huge debt to test Recto as new finance chief
The Treasury’s income would come from, among others, dividends from government corporations and from state shares in airport operations and the Philippine Amusement and Gaming Corp.
“It’s all about fiscal sustainability,” Recto told reporters at Malacañang where he and Frederick Go, the presidential adviser on investment and economic affairs, took their oaths of office before President Ferdinand Marcos Jr.
“The idea is to stretch every peso, including acting faster on investments, particularly the President just signed the public-private partnership law that will free up resources for social services, investments also creating more jobs for the country,” Recto said.
Marcos said Recto, 60, was replacing Benjamin Diokno but would be “continuing the policies that we had laid out from the beginning.”
Competence, integrity
Go, the 54-year-old former Robinsons Land president and CEO, said the administration’s goal was to “attract strategic investment.”
“We have to make a strong case to the world why they should invest here in the Philippines,” he said.
To do that, the administration must improve the ease of doing business, reduce “friction costs,” or the costs of completing payments in financial transactions, and finding solutions to “bureaucratic challenges,” Go said.
Marcos said Recto and Go embody competence, integrity and a deep sense of responsibility needed by government leaders.
Both of them would work together to create an environment that encourages investment, stimulate economic opportunities and uplift the lives of every Filipino citizen, he said.
As finance secretary, Recto would be leading the administration’s economic team.
“He will be a major player in how we stay on the path of growth, meet and even surpass our medium-term fiscal target, and achieve our developmental targets,” Marcos said.
Recto would promote ease in paying taxes and also the efficient and effective spending of taxpayer money, and devise strategies to tame inflation by “plugging supply gaps to injecting nonmonetary measures” to stabilize prices, he said.
No DOF reshuffle
“I also have asked him to be at the forefront of our antismuggling drive, pursue tax cheats, starting with the habitual ones who have raised tax evasion not just to an art but into a business,” Marcos said.
Asked if he had ordered Recto to study new tax reforms, the President said he did not want to preempt the new secretary in making any announcements regarding that.
Recto assured Department of Finance (DOF) employees that there would be no reshuffle in the agency.
Heavy debt load
He recalled that he brought only “one person” when he took over the National Economic and Development Authority (Neda) at the height of the financial crisis in 2008. He served as Neda director general under then President Gloria Macapagal-Arroyo until 2009.
The President appointed Diokno to the Monetary Board after the former finance secretary declined his offer to be part of the team that would manage the Maharlika Investment Fund (MIF), the country’s first sovereign wealth fund.
He said Diokno felt it was time for him to return “to his natural habitat.”
In a statement on Friday, Diokno said: “I am proud knowing that I will be leaving my post at a time when the Philippine economy, in general, and the DOF, in particular, are in a better state of affairs than when I inherited them,” he added.
When he took the finance portfolio, Diokno had to tackle a heavy debt-load following the Duterte administration’s borrowing spree to fund a costly pandemic response.
By the end of 2022, the debt-to-gross domestic product (GDP) ratio, a closely watched indicator of the government’s ability to settle its obligations, stood at 60.9 percent, above the 60-percent threshold deemed manageable for developing economies like the Philippines.
New tax measures
A huge debt pile risks diverting government funds from more productive spending that can power up the economy to debt payments. But the latest Treasury data showed the debt-to-GDP ratio improved to 60.2 percent as of the third quarter of last year.
To cut debts faster, the DOF under Diokno wanted Mr. Marcos to press Congress to hasten approval of new tax measures, such as Package 4 of the Comprehensive Tax Reform Program; the value-added rax (VAT) on digital service providers; excise on single-use plastic bags; and excise on sweetened beverages and junk food.
The DOF was also pushing for the passage of Package 3, or the Real Property Valuation and Assessment Reform (RPVAR), and the VAT refund for foreign tourists.
These revenue measures are still in the legislative mill for over a year now as the Marcos administration prioritized the legislation creating the MIF, which received presidential certification for urgent passage.
Biz groups’ support
Several local business groups and foreign chambers on Friday expressed support for Recto’s appointment.
These include the Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business organization, Philippine Retailers Association and the export-oriented Foreign Buyers Association of the Philippines (Fobap).
PCCI president Enunina Mangio said Recto was “perfectly suited for the job.”
“He has the experience, expertise and political backing that are critical if he is to oversee the strengthening of the country’s economic and fiscal positions,” Mangio said in a statement.
Fobap president Robert Young said Recto had shown determination to implement a measure that was necessary despite being unpopular, referring to the expanded VAT law that the new finance secretary had pushed nearly two decades ago.
Bankers’ pledge
The Makati Business Club pledged assistance to Recto in his new role of improving laws and policies to attract “job-creating investment and expansion.”
The Bankers’ Association of the Philippines (BAP) said Recto is “equipped with the necessary experience to promote Philippine economic growth.”
“As head of the Marcos administration’s economic team, Secretary Recto will play a critical role in the reformation of fiscal and economic policies, together with balancing political realities,” BAP said.
The British Chamber of Commerce of the Philippines and the American Chamber of Commerce of the Philippines, Inc. were the first foreign chambers to issue congratulatory statements to Recto.
His former colleagues in the Senate heaped praises on Recto, among them Senators Juan Edgardo Angara, Lito Lapid and Loren Legarda, who said she would cosponsor his confirmation in the Commission on Appointments.
Former Senate President Franklin Drilon said Recto’s experience as Neda chief and legislating fiscal policies would help him come up with better economic strategies.
“Recto is unquestionably the ideal choice to lead this endeavor,” Drilon said. —WITH REPORTS FROM ALDEN MONZON AND MARLON RAMOS