Benjamin Diokno Accepts Position as DOF Secretary Under the New Administration

On Thursday, current Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno accepted his new position as incoming Secretary of the Department of Finance (DOF) under the next administration. Diokno noted that he would “strive to continue prudently and carefully balancing the need to support economic growth, on one hand, and to maintain fiscal discipline, on the other” during his term as the finance chief.

Prior to being appointed as the BSP Governor in 2019, Diokno previously served as the Duterte administration’s budget chief. Upon accepting the Finance Secretary position, Diokno has cut his six-year term as BSP Governor short. However, Diokno only took over the remaining four years of Nestor A. Espenilla Jr. who passed away on Feb. 23, 2019, due to cancer.

Taking over the role of Diokno will be senior BSP Monetary Board member Felipe Medalla. Medalla will only serve as the BSP’s governor for the remaining 12 months of Diokno’s term, which is set to end on July 3, 2023. But, he may still be reappointed for another six-year term under the incoming administration. Medalla was previously the socio-economic planning secretary under the Estrada administration.

For his part, Diokno further expressed that he is “grateful and humbled” for the opportunity to handle the Philippines’ fiscal affairs. Amidst the numerous challenges he is expected to face, Diokno highlighted “the importance of policy continuity,” expressing confidence in the tax system left by the Duterte government.

“We need a lot of money to continue our growth momentum and to service our higher level of public debt,” explained the incoming Finance Secretary. “My position at the moment is our debt to GDP ratio is slightly above 60 percent limit. I don’t think that is really cause for concern because as long as we continue to grow at around six to seven percent, on a sustainable basis, we can easily outgrow our debt. That said, it is also important that I should look at the sustainability of the debt. This is to assure everybody — the domestic audience and international credit watchers – that we are serious about consolidating fiscal resources so that we are able to reduce our debt and deficit to GDP ratio over time.”

“This government has done a lot of reforms. I’m not saying it’s perfect, there are some areas that we can improve upon but to me, the focus should really be on tax administration,” Diokno added. “Too early for me at this point to make any position on whether or not to increase taxes (but) the tax system that we are leaving to the next government which I’m going to receive for the incoming government, are much, much better than the tax system that we inherited from the previous administration.”

In terms of the country’s GDP target, Diokno also noted that this is doable in light of the momentum of economic growth. “I think it’s important to raise the growth momentum of the economy because a strong economy means strong tax (and) government resources. The tax system is — in the economic language — elastic. So, the higher the growth of the economy, the more revenues we will collect.”

Diokno is also keen to not make any major changes in the DOF, following his plan to retain most of the current undersecretaries. “The post of finance secretary is equally challenging as being governor of the central bank. We’re shooting for the same objective for the country to make the Philippines an upper-middle-income economy soon. I think we are almost there but because of the pandemic, that goal was disrupted.” The incoming finance chief has, likewise, set his eyes on lowering the level of poverty in the country, alongside tax generation and controlling the high level of public debt.

Source: Manila Bulletin