Energy investments should be prioritized to boost the country’s economic growth, International Monetary Fund (IMF) Representative to the Philippines Ragnar Gudmundsson said
In a report by the Business World, Gudmundsson emphasized the importance of prioritizing the energy transition in the country. He stated that the Philippines is in a favorable position to attract foreign investors in this field and, therefore, it is crucial to develop well-prepared projects.
Additionally, the government has set targets to increase the share of renewable energy (RE) in the power mix to 35% by 2030 and 50% by 2040.
The IMF has projected a growth of 6% for the country’s economy this year, with an expected range of 5.5-6% for 2024.
Gudmundsson suggested that the government should evaluate its tax policy and ensure that tax revenues are directed towards essential investments in priority sectors.
He emphasized the importance of rationalizing expenditure and ensuring its effectiveness but also highlighted the need for measures on taxation to meet consolidated targets and maintain debt sustainability.
He further stated that implementing and managing a carbon tax is relatively straightforward, and as long as the generated revenue is directed towards promoting inclusive growth and assisting vulnerable households, significant advancements can be made in those domains.
The Department of Finance (DOF) has announced that it is currently examining the viability of implementing a carbon tax, which ranks among its top priority initiatives.
DOF Fiscal Policy and Planning Officer Director, Rowena S. Sta. Clara, expressed the department’s view on carbon taxation, highlighting its potential as a revenue stream that aligns with the objective of advancing environmental sustainability and addressing key climate change concerns.
She also stressed that the primary aim is to establish a carbon pricing policy that aligns with the carbon reduction commitments of the Paris Agreement without exerting undue pressure on economic growth during the recovery phase.