Preemptive action needed vs financial, economic threats of pandemic–Dominguez

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Tax Reform

Finance Secretary Carlos Dominguez III has underscored the need for regular systemic risk assessments to enable the government to quickly spot the underlying vulnerabilities of, and anticipate potential threats to, the country’s financial system from the COVID-19 pandemic.

Dominguez said conducting these systemic risk assessments will protect both the economy and the Filipino people from “avoidable shocks” that could set back the country’s progress towards a strong post-pandemic recovery.

“Having a better understanding and view of brewing risks is necessary for calibrated actions and policy interventions. This is the way modern governments should operate. We should anticipate threats rather than merely react to problems after they have broken out,” Dominguez said at Wednesday’s virtual launching of the Financial Stability Coordination Council (FSCC)’s 2021 First Semester Report.

President Duterte recently institutionalized the FSCC through Executive Order (EO) No. 144 to further ensure the stability of the Philippines’ financial system.

EO 144 created the interagency FSCC, with the Bangko Sentral ng Pilipinas (BSP), Department of Finance (DOF), Securities and Exchange Commission (SEC), Insurance Commission (IC) and the Philippine Deposit Insurance Corp. (PDIC) as its member-agencies.

Dominguez sits as a member of the FSCC Executive Committee, which is chaired by BSP Gov. Benjamin Diokno.

“The institutionalization of the FSCC could not have come at a better time. The pandemic put our financial stability under great stress. Fortunately, the achievement of the Duterte administration’s tax and economic policy reforms set us on a stable fiscal footing ahead of the contagion,” Dominguez said.

“This strong financial position enabled us to deploy all that was needed to meet the global health crisis head-on,” he added.

Dominguez said EO 144 “underscores the government’s strong commitment in mitigating systemic risks in our financial system and protecting our people from avoidable shocks that could set back our progress.”

On the part of the DOF, Dominguez assured the public that it will continue to exercise judicious financial management to maintain the country’s fiscal stamina and ensure the resilience of the economy.

“Rest assured, we are doing our utmost to safeguard the health of our financial system to enable it to continue serving the needs of the public and support our ongoing recovery efforts. We will always be vigilant against the risks posed by the pandemic while taking advantage of opportunities that will help restore our country’s economic growth trajectory,” he said.

The FSCC aims to reduce uncertainties and pinpoint underlying vulnerabilities in the financial system through its semestral assessments contained in its Financial Stability Reports (FSRs).

Its job is to help the government and other stakeholders make well-informed decisions in shaping the country’s national agenda.

Dominguez said the 2021 First Semester Report will help “arm government agencies with the necessary tools to allow them to take swift action against possible risks while discharging full responsibility and prudence in undertaking them.”

The FSCC decided earlier in 2020 to shift the release of its FSRs from an annual to a semestral series owing to changing market conditions and the need to keep market stakeholders better informed in a more timely manner. (DOF)

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