The administration of President Rodrigo Duterte did a fair job in borrowing money amid the pandemic, Senator Sonny Angara said.
Angara, chair of the Senate committee on finance, said he understands the need for the government to borrow money to support the economy and provide for the needs of its constituents.
“It’s been a difficult two years. Most countries actually increased their debt over the period of the pandemic because they had to deal with the pandemic. Whether it’s in the form of giving subsidies to their citizens or giving support to businesses. Various countries have different economic stimulus funds para tulungan yung mga MSMEs (to help MSMEs),” the veteran legislator said.
The seasoned lawmaker noted that the country, having about a 63 percent debt to GDP ratio, is still reasonable.
“It’s a little bit over our predicted 60 percent, parang yun yung (it is like the) formal or traditional rule. But in times of pandemic, gumagalaw din naman yung goal posts or boundaries so to speak (the goal posts or boundaries moved so to speak),” the senator said.
“We really finance our budget yearly with a bit of borrowing. That will remain if not constant, probably somewhat in the vicinity of that.”
“Traditionally, we really borrow. We really finance our budget yearly with a bit of borrowing. That will remain if not constant, probably somewhat in the vicinity of that,” he added.
The challenge, however, Angara noted, is how to meet the growing spending saying traditionally, the country’s budget expands by a certain percentage every year.
“The challenge is to make revenues also grow proportionally so that you spend in such a way that your spending is productive.”
“The challenge is to make revenues also grow proportionally so that you spend in such a way that your spending is productive. You’re spending on things that will really benefit the people and which will pay dividends over the long term. So, as things like education, health, and infrastructure. Those are the things that should not be compromised by any means,” he said.
Angara said the government borrowing money is normal because revenues went down.
He is hoping that the recovery of the businesses will be quick.
“We’ve seen it happen in different countries. Sa (In the) US, over a few months, they have produced over a million jobs. It’s a faster-than-expected recovery. It can happen [here] with the right mix of policies and economic incentives for the private sector,” Angara stressed.
There are challenges for the public finances, he added, but once the private sector recovers, the public sector also will benefit in the form of increased revenues and tax collections.
The Department of Finance (DOF) said in a recent statement despite record-high debts amid the COVID-19 pandemic, the country has managed to keep foreign borrowings manageable.
While the country’s external debt stock rose 8.1 percent to $106.4 billion last year, DOF’s chief economist and retired Undersecretary Gil Beltran said, it was equivalent to 27 percent of gross domestic product (GDP), slightly down from 27.2 percent in 2020.
“At 27 percent of GDP, the country’s external debt is at a manageable level. This ratio is less than a half of the level in 2005, at 57.3 percent,” Beltran said in a recent DOF economic bulletin.
Based on the latest Bureau of the Treasury data, the P12.76-trillion outstanding debt of the national government as of April 2022, only 30 percent or P3.83-trillion were foreign borrowings.
Before the pandemic in 2019, the country’s external debt-to-GDP was at 22.2 percent.