Dominguez assures Moody's on Duterte's economic agenda

MANILA, Philippines -- A routine economic check of Moody's Investors Service late last month saw Finance Secretary Carlos Dominguez defending President Duterte's "non-traditional" leadership in a bid to keep the country's investment grade rating.

"If you talk about the political noise, yes, there is... It’s inevitable because of the personality of the President and people not used to this type of governance," Dominguez said.

"But he’s fully engaged in (the administration’s) economic agenda," he was quoted as saying in a statement.

The Finance chief met with Moody's officials, led by vice-president Christian de Guzman, on Sept. 29. The debt watcher was in the country from Sept. 28 to 30.

Their meeting came before another credit rater, S&P Global Ratings, warned of "political uncertainty" as a result of Duterte's war on drugs allegedly violating human rights and weakening state institutions.

This was also before Dominguez, Budget Secretary Benjamin Diokno and Socioeconomic Planning Secretary Ernesto Pernia met with Moody's again in Washington D.C. last week.

Moody's currently rates the Philippines Baa2, with a stable outlook. It is classified as investment grade, indicating the country has more than enough capacity to settle its debts.

A higher credit rating affords the country lower interest on its debts, a lower one does the opposite. The former also makes the country attractive to investments.

During the meeting, Dominguez assured Moody's that the Duterte administration will pursue inclusive economic growth for the next six years.

"It would be almost criminal, negligent of us not to do what we’re going to do," he told them.

Tax reform package

Among others, he cited the new government's 10-point socioeconomic agenda, under which the Department of Finance has worked on its first tax reform package.

He assured that the tax reform, consisting of five packages, will not only "ease the tax burden on wage earners," but also "raise enough revenues to accelerate spending."

Moody's had earlier tagged the government's low revenue base as a credit weakness.

Dominguez also reiterated commitments to bring down the poverty rate to 17 percent by 2022 from the current 26 percent.

He said this will also only be done through the implementation of the Reproductive Health Law, which "no other government has done."

"Reducing the poverty rate cannot be  accomplished unless the president also focuses on his two other priority goals...," DOF said.

"(This) is to transform the country into a law-abiding society by eliminating crime and corruption, and ensuring lasting peace within the country and with its neighbors," it added.