PH outstanding debt at P10.99 trillion, P3.1 trillion loans: ‘Still manageable’—Dominguez
More loans for the Philippines, whose outstanding debt is P10.99 trillion as of end-April 2021.
According to Finance Secretary Carlos Dominguez III, despite the “temporary surge” in borrowings, the Philippine debt remains “manageable” and within the bounds of fiscal viability.
At the Senate hearing today, June 15, Dominguez gave a breakdown of the country’s fiscal performance and programs, explaining that total borrowings could reach P3.1 trillion by end of the year, which is 58.7% as per the gross domestic product (GDP) in 2021. He acknowledged that this is a huge jump from the “historic low” of P1.02 trillion or 39.6% of the GDP in 2019.
“The government had to quickly mobilize resources to support our health system, procure test kits in the millions and deliver cash support to our most vulnerable citizens. All these required higher deficit spending that was magnified with the reduction in revenue flow due to lockdowns that slowed down economic activity,” Dominguez said.
At the Cabinet meeting on Monday night, he said total revenues remain low at P2.88 trillion, only a 0.7% increase from P2.86 trillion in 2020, due to economic restrictions in the lockdown period since last year.
Dominguez emphasized that debt levels were managed due to the country’s high credit ratings that have been developed through fiscal prudence, pacts, and structural reforms since 2016.
“We need to continue exercising prudence in managing our financial affairs. We need to protect our fiscal sustainability and ensure that we have an ample war chest for this long battle,” he said.
Dominguez said that while the debt of the country has increased it can still be sustainable and handled in the coming years since the pandemic is only a “temporary” situation. He predicted that by 2022 to 2023, the country will become normal again. “It is not a permanent situation. Once we open our economy our revenues will go back, and once we beat COVID, our expenditures on COVID will also go down,” he said.
On the budget for procuring COVID -19 vaccines, he said that P88.6 billion was “enough to procure 148 million doses and vaccinate at least 70 million Filipinos, 100% of the adult population.”
“We don’t have to worry, the money is there,” he said.
Allegations of corruption
During the Cabinet meeting on Monday, Duterte addressed allegations of government corruption.
“Kung sabihin ninyo may korupsyon sa goberyno, matagal na yan, noon pa yan, nag-umpisa yan hindi sa panahon ko. Kaya magdahan-dahan ka ng salita. Kapag sinabi ko na ayaw ko ng corruption, pag-inabutan ka, patay ka,” Duterte said.
The Philippine government’s debt reached P10.99 trillion as of end-April, a 2% or P217.49 billion increase from March from both local and external financing.
The internal debt stood at P7.8 trillion, issued by the government securities, while the external debt accumulated to P3.178 trillion from foreign loans and issuance of global bonds.
Additional loan for COVID-19 response from Japan
On June 9, the Japanese government awarded the Philippines an P8.78 billion loan released under the Post-Disaster Standby Loan Phase 2 (PDSL 2) to finance pandemic response measures such as testing, quarantine facility expansion and social amelioration programs. The loan repayment lasts 40 years, with a grace period of 10 years and a fixed interest rate of 0.01 percent.
The PDSL 2 is considered a contingency fund, which allows the country to withdraw up to P22 billion worth of loans in financing response measures, not only for the pandemic, but also for the aftermath of natural disasters.
“The loss of incomes is the most common scar from this pandemic-cum-recession. The balance between income and debt is the key downside risk today. This has left borrowers vulnerable because their capacity to service their debts has been put at risk,” Bangko Sentral ng Pilipinas (BSP) and Financial Service Centers Cooperative (FSCC) Chairman Benjamin Dikno said in a statement released by BSP on the state of the country’s financial stability.