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Solon: Duterte’s administration is on board with responsible borrowing
MANILA, Philippines — Senator Sonny Angara claimed the Duterte administration did a good job borrowing money during the outbreak.
Angara, the chair of the Senate Finance Committee, said he recognizes the government’s need to borrow money in order to sustain the economy and meet the requirements of its voters.
“It’s been a challenging two years. Because they had to deal with the pandemic, most countries actually increased their debt during the outbreak. Whether it’s in the form of subsidizing citizens or providing assistance to businesses. Various countries have different economic stimulus funds to help MSMEs (tulungan yung mga MSMEs) “In a Wednesday night interview with One News, he stated.
Angara pointed out that the country’s debt-to-GDP ratio is around 63 percent, which is still manageable.
“It’s slightly more than our projected 60%, but parang yun yung (it’s the same as) the formal or customary rule. However, in times of epidemic, the goal posts or limits may be shifted (the goal posts or boundaries may be altered) “he stated
“Traditionally, we have relied heavily on borrowing. We borrow a little money to fund our budget every year. That will probably remain, if not constant, in the vicinity of that “He went on to say.
The issue, according to Angara, is how to meet the country’s expanding spending, as the country’s budget rises by a set proportion every year.
“The goal is to increase revenues in a proportional manner so that you can spend in a productive manner. You’re investing in things that will benefit people and pay off in the long run. Things like education, health care, and infrastructure come to mind. Those are the things that must not be jeopardized under any circumstances “he stated
The government borrowing money, according to Angara, is natural because revenues have decreased.
He is optimistic that the firms will rebound quickly.
“It’s happened in a number of countries. Over the course of a few months, they have created over a million employees in the United States. It’s a better-than-expected turnaround. With the correct mix of policies and economic incentives for the private sector, it can happen [here] “he stated
The public finances have challenges, but as the private sector recovers, the public sector will profit from greater revenues and tax collections, according to Angara.
In a recent announcement, the Department of Finance (DOF) stated that despite record-high debt levels due to the Covid-19 pandemic, the country has managed to keep foreign borrowings under control.
While the country’s external debt stock increased by 8.1 percent to USD106.4 billion last year, it was still comparable to 27 percent of GDP, down from 27.2 percent in 2020, according to DOF’s senior economist and retiring Undersecretary Gil Beltran.
“The country’s external debt is manageable at 27 percent of GDP.” In a recent DOF economic update, Beltran stated, “This ratio is less than half of what it was in 2005, when it was 57.3 percent.”
According to the latest Bureau of the Treasury figures, foreign borrowings accounted for only 30% of the national government’s outstanding debt of PHP12.76 trillion as of April 2022, or PHP3.83 trillion.
The country’s external debt-to-GDP ratio was 22.2 percent before the epidemic in 2019.