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00:00Where is the Philippines now how do you think the recovery momentum looks since the lockdowns were loosened . Well . You have to start from where we started off . In 2016 we instituted a series of tax reforms essentially bringing up our tax collections and bring it up bring it up to its highest ever in 22 years. So we were well-prepared for this for this crisis. And we as you know we were preparing for our bill bill bill. That's a strong position. This very much helpful for us in this crisis . In fact this crisis right now for us is very strange because our inflation rate is very low. Interest rates are very low. Our vessel is probably among the strongest in Southeast Asia. And we have a very high quality research. It's almost ninety nine million US dollars. So essentially we will beg for this. Our revenues through taxation has dropped because of the drop in demand. And we are covering the shortfall in in our fund shortfall through borrowing. And first of all we borrowed money from the multilateral agencies. They hit the market last April with a two point three million billion dollar issue. So your answer. I want to get to some more points and I think this is a good way to start. You had a good cushion going in your facing. You just had a 16 percent GDP drop. What more may you need to do. I think in particular the government got its latest advance advanced five hundred forty billion pesos from the Banco Central Bank penis. Are you inclined now even with that good cushion you came in with to make use of the additional 280 billion you can borrow from the central bank . The amendment that we don't need to do that but that's it in our reserves. So we we believe that our requirements the battery program and our current revenue flow which incidentally is 8 percent over our league estimates for tax revenues is is going to hold us a bit. We're keeping the balance of our credit line with the central bank in reserve. OK. Well you're coming. Budget document show that the short term borrowing from the BSP could hit a trillion pesos this year . Does that an indication when that was set up that that's about how much you may need to borrow next year in 2021. Yes it's about right. So you do you do anticipate borrowing more from the banks and channeling creepiness. Yes . Well as I said we'll keep that in reserve. Our first options are to go back into the commercial market. But you know if that if the economy doesn't perform as we expect we will go back to them. You have any concern about crowding out with your private borrowers in the Philippines . Absolutely not. Actually the administration has injected a lot of liquidity into the market by reducing the reserve requirements of banks. Right . When we allowed the reserve requirements of 80 percent and now they're probably around 5 percent. So and for every 100 basis points down is about 100 billion or so. Okay. Well let me I want to ask you about what you might do in terms of this sense . Every central bank's being asked in the world every government . Do you have more ammunition if you need to do more. Do you think there might be a need for a third pandemic relief measure for the Philippines . At the moment we are seeing a very strong recovery actually except the economy. You know we have a very good economy. Unfortunately the contagion has forced us to slow down but actually open up. We can see a very strong recovery through jobs. You know our lowest job joblessness rate was in in May and that was 17 percent. But as we opened we we learned that look 10 percent joblessness rate. A mistake to bring it down to around 5 or 6 percent. OK any any new taxes you might introduce you're going to sell off any more assets before present daughter. His term ends in 2022 . Well we we are not really seriously considering any taxes. You know taxing our citizens when they when their incomes are down . It's not a good idea as to selling assets. We're not that desperate yet. And besides I value most of our assets and in real estate and in mining operations. And quite frankly the real estate market is uncertain at this point in time although it has been holding quite well . Are you OK sir. Go ahead . All right. Well how about the risk of rising defaults . Do you see any of that bubbling up at all is a concern that could be a systemic risk to the Philippines . Are you talking about the private banks . Certainly yes. Anyway we are prepared for that. We have introduced legislation to revive the setting up of special purpose vehicles so that banks can unload their sorry assets during the Asian crisis. It took them almost five years to set this up. We are just about to get the legislation passed for this. We are also asking the legislators for authority for the government to organize a company which really multilateral agencies investments and private simply wants to address problems that are beyond the liquidity of the solvency problems in the most important companies in the Philippines. So that legislation is coming along and we are moving. That is going to be something like that . I want to ask you and you mentioned the peso about how strong it's been. But I want to step back in the big picture because you know we've seen the scramble for dollars throughout this covered crisis. We saw the Fed swap lines. We've seen record dollar issuance. Why did the world's governments and companies need so many dollars right now. Your secretary of finance you've been a business man. You but you were the CEO Philippines Airlines. What is your sense of this . Well you know in the in that crisis everybody wants to make sure that the right chest is is healthy. And because we don't know how long this is going to last . You know I completely agree with what the IMF says that this is going to be this recovery is going to be longer than expected and there will be a lot of ups and downs. So we want to make sure that we have enough. I know in our in our watches. Quick final question before I let you go. The airlines again you were in the airline industry. Any special steps you might want to take or need to take for the airline industry in the Philippines . Right now we are discussing with the airlines I actually have been talking to them since March. Since the demand drop back . You know the airlines have got me on through five or six isolations of the rescue program and I'm told that we are prepared to help you but we are not going to lead the way. We view our private sector. We expect the private sector banks to chip in and we are going to be there for you when the entire financial package is ready .

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Philippines May Borrow From Central Bank in 2021: Dominguez

Philippine Finance Secretary Carlos Dominguez discusses the health of the economy and the government's policies amid the coronavirus outbreak. He speaks with Kathleen Hays on "Bloomberg Daybreak: Asia." (Source: Bloomberg)

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