MANILA, Philippines – The Philippines continued its trend of economic gains, moving up 12 notches to 58th in the 2017 Index of Economic Freedom (IEF) from 70th place last year, announced the Bangko Sentral ng Pilipinas’ Investor Relations Office (BSP-IRO) on Sunday, February 19.
The country got a score of 65.6 in the latest annual global survey conducted by Washington-based think tank Heritage Foundation, which covered 186 countries. It is a 2.5-point increase from its 2016 IEF score.
The IRO also noted that the score is higher than the world average of 60.9 and the Asia-Pacific region average of 60.4.
The IEF, according to the Heritage Foundation, reveals a positive relationship between economic freedom and a variety of socioeconomic goals, including poverty elimination, greater per capita wealth, healthier societies, cleaner environments, and democracy.
The Philippines’ latest score means it retains its place in the “moderately free” category, which includes “countries that provide institutional environments in which individuals and private enterprises benefit from at least a moderate degree of economic freedom in the pursuit of greater competitiveness, growth, and prosperity.”
The IEF measures economic freedom based on 10 quantitative and qualitative factors grouped under 4 broad categories or pillars – rule of law, limited government, regulatory efficiency, and open markets.
The Heritage Foundation attributed the Philippines’ improved ranking to successes in fiscal policy, government spending, and monetary stability.
“The government continues to pursue legislative reforms to enhance the overall entrepreneurial environment and develop a stronger private sector that is needed to generate broader-based job growth,” it said in its report.
The Philippines improved the most in the monetary freedom category, rising 18 places from 86th to 68th. It also ranked very high in government spending at 22nd, and fiscal health at 26th.
The country’s gross domestic product (GDP) grew by 6.8% in 2016, one of the fastest in Asia, buoyed by higher investment as well as robust public and private consumption.
Increased spending on infrastructure has also been a priority of the Duterte administration, while foreign direct investments reached $7 billion in the first 11 months of 2016.
Stable financial sector
The Heritage Foundation also underscored the stability of the Philippines’ financial sector, adding that in 2016, the BSP announced it would end a 17-year moratorium on the granting of new banking licenses.
The central bank, for its part, said its aim is to push for an “inclusive” financial sector.
“The BSP’s firm commitment to maintain price stability and promote a sound and inclusive financial sector and the positive results we have achieved thus far have contributed to the big improvement of the Philippines’ IEF ranking,” said BSP Governor Amando Tetangco Jr in a statement.
“The benign inflation environment has enabled the economy to further accelerate in 2016, a remarkable feat given the uncertainty and volatility in the global scene,” he added.
Finance Secretary Carlos Dominguez III also welcomed the news, but pointed out that tax reforms are still needed.
“For the Philippines to aspire to move up higher from the ‘moderately free’ to the ‘mostly free’ category in the near future, the Duterte administration needs to pursue without letup its comprehensive tax reform program along with other bold reform initiatives to keep the high-growth momentum, upgrade the living standards of the Filipino poor, eliminate official corruption, and improve the ease of doing business in order to attract more investments and create jobs for all,” he said. – Rappler.com
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