Tag: Ralph Recto

Department of Finance (DOF) says 6% economic growth is quite difficult to achieve this year

Department of Finance (DOF) says 6% economic growth is quite difficult to achieve this year

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The uncertainty about this year’s economic growth for the Philippines has gotten stronger as the Department of Finance (DOF) admitted that achieving 6% growth is quite difficult, according to a Manila Bulletin news report. The DOF pointed to external shocks that are affecting the national economy.

To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…

While the Philippine economy has already been recovering from its deep recession during the height of the Covid-19 pandemic, hitting its growth potential of six percent would be challenging given the global uncertainties spilling over domestically, according to the Department of Finance (DOF).

“We do think that the potential of the Philippines is at the minimum six-percent growth. But of course, it’s quite difficult, especially knowing some of the challenges that we’re seeing,” DOF Undersecretary and Chief Economist Domini Velasquez told reporters during the Philippine thrift banks’ annual convention on Tuesday, July 15.

Just before the initial three-month pause on reciprocal tariffs ended on July 9, United States (US) President Donald Trump had stretched it to Aug. 1, but hiked the rates for Philippine exports to 20 percent from 17 percent previously, repeatedly citing the “significant and persistent trade deficit” that the trade giant has with its former colony.

Velasquez noted that the tariff hike was among the uncertainties that the Cabinet-level Development Budget Coordination Committee (DBCC) had considered in downscaling its growth target for the year, through 2028.

Last month, the economic team slashed its 2025 GDP growth target to between 5.5 percent and 6.5 percent from six- to 6.5-percent previously. Cited as factors were heightened external uncertainties, especially the ongoing conflicts in the Middle East and the imposition of US tariffs.

Finance Secretary Ralph G. Recto told reporters during an informal press chat on Wednesday, July 16, that he expects the economy to accelerate “significantly” in the second quarter compared to the previous quarter.

“In effect, the target is still six percent for the year,” Recto noted, taking off from the recently revised growth goal. “Realistically, it’s probably around 5.7 percent or 5.8 percent for the year. It depends, because there’s a lot of uncertainty—uncertainty with trade policy.”

“But I think the second quarter will definitely be better than the first,” Recto said, noting that the improvement will be driven by both government and household consumption.

The DBCC had also narrowed the growth target range for 2026 to 2028 to six to seven percent, from the previously more ambitious six  to eight percent.

“We did recognize those [tariffs]. When we dialed down on our growth target in 2025, it’s really because of the external factors that we were seeing,” Velasquez said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the national economy is not strong enough to achieve 6% GDP growth by the end of this year? What do you think the national government should do to strengthen economic growth and make the Philippines more attractive to foreign investors? Do you think the Philippines still has a chance to convince America to lower its planned tariff on Philippine-made goods?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at  @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco

Proposed measure to increase tax on capital gains withdrawn by DOF

Proposed measure to increase tax on capital gains withdrawn by DOF

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In recent times, the Department of Finance (DOF) has withdrawn the proposed measure on increasing taxes on capital gains pointing to certain economic factors according to a GMA Network news report.

To put things in perspective, posted below is an excerpt from the news report of GMA News. Some parts in boldface…

The proposed measure increasing taxes on capital gains, donor’s, and estate to 10% from 6% has been withdrawn as the Department of Finance (DOF) determined that there would be “no need” for additional revenue measures, citing the government’s robust fiscal position.

In a statement, Albay 2nd District Representative and House Ways and Means chairman Joey Sarte Salceda disclosed that the DOF pulled out the Government Revenues Optimization through the Wealth Tax Harmonization (GROWTH) Bill, which proposed a hike in tax rate for capital gains, donor taxes, and estate taxes.

The bill is the Marcos administration’s tweaked version of the Passive Income and Financial Intermediary Taxation Act (PIFITA), proposed by the Duterte administration as Package 4 of its Comprehensive Tax Reform Program (CTRP).

Citing a letter from the DOF, dated April 29, Salceda said the Finance Department is withdrawing the proposed measure, citing “stronger-than-expected revenue collections, a double-digit growth rate in tax collections, and steady progress toward the government’s fiscal consolidation goals.”

In a separate statement, Finance Secretary Ralph Recto said that “given our current strong fiscal performance, these are not needed at this time.”

“The government is properly managing its finances, ensuring that public needs are met without burdening the citizenry with new taxes,” he added.

‘More than sufficient’ – In particular, the Finance chief cited the 13.55% growth in total tax collections to P931.5 billion in the first quarter of 2025.

Broken down, the Bureau of Internal Revenue (BIR) posted P690.4 billion in collections, up 16.67% year-on-year; while the Bureau of Customs saw a 5.72% growth in collection to P231.4 billion during the same period.

“At this point, current revenues are more than sufficient to support our expenditure requirements. We are meeting our obligations, funding key programs, and growing the economy without having to impose new taxes on our kababayan,” Recto said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think it was just right for the DOF to withdraw the measure? Do you thinking hiking capital gains tax, donor taxes and estate taxes are needed to ensure economic growth for the Philippines?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at  @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco

IRR of Value-Added Tax (VAT) refund for foreign tourists signed

IRR of Value-Added Tax (VAT) refund for foreign tourists signed

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Recently the Philippines officially became a VAT-free destination for foreign tourists as the implementing rules and regulations (IRR) of Republic Act 12079 (Value-Added Tax Refund for Non-Resident Tourists) has been signed, according to a Philippine News Agency (PNA) news article. It should be noted that the Republic Act was signed into law last December.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

Government officials signed on Monday the implementing rules and regulations (IRR) of Republic Act (RA) 12079 or the Value-Added Tax (VAT) Refund for Non-Resident Tourists.

In a statement, the Department of Finance (DOF) said the IRR was signed by Secretary Ralph Recto, Bureau of Customs Commissioner Bienvenido Rubio and Bureau of Internal Revenue Deputy Commissioner Marissa Cabreros.

It was witnessed by Department of Tourism Secretary Christina Garcia-Frasco and Office of the Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go.

RA 12079 aims to boost tourism and encourage more foreign tourists to shop and spend more in the Philippines, thereby bolstering economic growth.

Under the IRR, non-resident tourists or foreign passport holders may apply for a VAT refund for locally purchased goods from accredited stores that are equivalent to at least PHP3,000.

The goods must be physically taken out of the Philippines by the tourist as accompanied baggage within 60 days from the date of purchase.

The VAT refund applies only to retail and tangible goods, such as clothing, apparel, electronics, gadgets, jewelry, accessories, souvenirs, food or non-food consumables, and other goods intended for personal use.

“With a multiplier effect of 1.97, every 100 pesos spent by a tourist generates 197 pesos in economic output. Imagine that. Halos doble ang balik sa ekonomiya (The return to the economy is almost double),” Recto said.

“And more money spent by foreign tourists means more businesses created, more Filipino workers hired, more jobs provided, higher incomes for our people and more revenues for the government to collect. That’s the simple formula for growth,” he added.

Recto cited the importance of effective executive to unlock the law’s full potential.

He said the country must establish a fully functional VAT refund system and a surge in inbound tourism.

“We want more tourists to come — and we want them to stay longer, spend bigger, and transact with convenience,” he said.

Heeding President Ferdinand R. Marcos Jr.’s call, Recto vowed to ensure that the VAT refund process is simple, accessible and culturally inclusive.

“From our end at the Department of Finance, we aim to deliver a VAT refund system that is world-class, modern, and built on the principles of transparency, efficiency and ease,” he said.

The IRR mandates the DOF to engage the services of reputable and internationally recognized VAT refund operators to provide end-to-end solutions to the government. Such refunds may be made electronically or in cash to enhance the ease of doing business.

Let me end this post by asking you readers: What is your reaction to this recent development? Now the IRR of the VAT refund for foreign tourists has officially been signed, do you expect positive impact on Philippine tourism to happen this year? Do you think a lot of tourists overseas have been waiting for the Philippines to establish the VAT refund for foreign tourists?  

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at  @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco

Finance Secretary confident with 6% Philippine economic growth this year

Finance Secretary confident with 6% Philippine economic growth this year

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Recently, Finance Secretary Ralph Recto expressed during an interview with Bloomberg TV that the Philippine economy will grow by at least 6% this year and mentioned factors like continued infrastructure spending, low unemployment, the cutting of interest rates and more, according to a Philippine News Agency (PNA) news article.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

Finance Secretary Ralph Recto said he is confident that Philippine economic growth would hit at least 6 percent this year.

In an interview with Bloomberg TV on Wednesday, Recto said he is banking on more interest rate cuts, infrastructure spending, and election-related spending to boost economic growth.

“We’re pretty confident that we would hit at least a 6 percent growth. The World Bank, the IMF (International Monetary Fund), and many other institutions are saying that we’re on track to 6 percent. Our macroeconomic fundamentals are very good,” said Recto.

“Unemployment is down. The middle class is growing. We’re investing more than 5 percent of GDP (gross domestic product) in infrastructure. We have elections also right now, and during elections, there’s more spending, so we’re pretty confident we hit at the very least 6 percent this year.

He said with inflation settling within the government’s 2 percent to 4 percent target range, the Bangko Sentral ng Pilipinas (BSP) has room to further reduce policy rates, which in turn, would boost consumer spending.

“Equally important, I suppose, is the reduction of interest rates. It would appear that, because inflation has been controlled in the Philippines and the inflation today is something like 2.5 percent, there is room for a rate cut in our next (meeting) so we’re in an easing cycle. It’s a high probability that we could do a rate cut also for in our next meeting,” he said.

The Monetary Board of the BSP has so far cut rates by 75 basis points last year. Recto said he is hoping that the BSP Monetary Board would deliver a 50 to 75 basis point cut this year.

“Hopefully, at the minimum 50 and probably 75 basis points, for the year that will help propel growth, consumption, and investments moving forward,” he said, adding that the rate cuts would boost economic growth by at least half a percent.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines will grow by at least 6% by the end of this year? Do you think Recto’s interview will convince foreign investors to invest in the Philippines this year? 

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at  @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco

IMF sees stronger economic growth for the Philippines in 2026 but warns about risks related to external developments

IMF sees stronger economic growth for the Philippines in 2026 but warns about risks related to external developments

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Recently the International Monetary Fund (IMF) stated that it expects the economic growth of the Philippines to get stronger in 2026 but it issue a warning that external developments could prevent it from happening, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld Some parts in boldface…

THE PHILIPPINE ECONOMY will continue to accelerate from this year to 2026 as domestic demand remains robust, the International Monetary Fund (IMF) said, but warned risks are tilted to the downside due to possible external shocks.

At the same time, Finance Secretary Ralph G. Recto said that the Philippines likely failed to hit its 6-6.5% growth goal for 2024, amid typhoons.

“If it hits 6% in the fourth quarter, I’ll be happy with that. I don’t think it will hit 6% for 2024, but I think it will surpass 6% in 2025,” Mr. Recto told reporters on Jan. 16.

For the first nine months of 2024, Philippine growth averaged 5.8%, the same as the IMF’s projection for the full year. Preliminary fourth-quarter and full-year gross domestic product (GDP) data will be released on Jan. 30.

In its latest World Economic Outlook  update, the IMF kept its GDP forecasts for the Philippines at 6.1% this year and 6.3% for 2026, the same as its projections in October.

These would fall within the government’s 6-8% GDP target for 2025 and 2026.

“Growth for 2025-2026 is projected to be primarily driven by domestic demand, namely consumption and investment,” an IMF spokesperson said in an e-mail.

“Consumption growth will be supported by lower food prices and gradual monetary policy easing,” it added.

Latest data from the Philippine Statistics Authority showed household consumption, which accounts for over three-fourths of the economy, jumped by 5.1% in the third quarter from 4.7% a quarter ago.

“Investment growth is expected to pick up on the back of a sustained public investment push, gradually declining borrowing costs and acceleration in the implementation of public-private partnership projects and foreign direct investments (FDI), following recent legislative reforms,” the IMF said.

Gross capital formation, the investment component of the economy, expanded by 13.1% in the third quarter, a turnaround from the 0.3% dip a year ago.

However, the IMF said that the balance of risks to the growth outlook is tilted to the downside, citing external risks.

“Some of the main downside risks include recurrent commodity price volatility, and new supply shocks, which may necessitate tighter monetary policy to anchor inflation expectations,” it said.

The IMF also cited shocks such as geopolitical tensions which could disrupt trade and other financial flows.

“Higher for longer policy rates in advanced economies (could cause) capital outflows, and tighter financial conditions,” it added.

The multilateral institution also cited climate shocks and extreme weather events which would lead to economic losses.

“There are also upside risks to the outlook, including from higher-than-expected growth in private investment through public-private partnerships, higher inward FDI following a faster-than-expected global recovery, or stronger reform momentum,” it added.

INFLATION – Meanwhile, the IMF said it expects inflation to remain within the central bank’s 2-4% target range in the near to medium term. It projects headline inflation to average 2.8% this year and 3% in 2026.

“However, risks are tilted to the upside, as rising geopolitical tensions, extreme climate events, and recurrent commodity price volatility continue to pose upside risks to inflation,” it said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the IMF is correct with its current analysis of the details and economic forecast for the Philippines? Do you think the national government should focus more on attracting new foreign investors and bringing inflation down to build up the economic momentum?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at  @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco