Gov't to borrow more to deal with COVID-19 impact

The Duterte administration is looking at increasing its borrowings by as much as P90 billion as the coronavirus disease 2019 (COVID-19) is seen to widen the government’s fiscal shortfall.

During a press conference following the Economic Development Cluster in Manila on Tuesday, Finance Secretary Carlos Dominguez III said the increased borrowing is a “stimulus program” to keep the aggressive spending initiative of the government for its infrastructure initiatives this year “despite the fact that our revenues are going down.”

“Build, Build, Build will go full blast,” he said.

The Finance chief said that total revenue collection is projected to be P91 billion lower “assuming that the COVID-19 induced disruptions last until the middle of the year.”

For his part, Socioeconomic Planning Secretary Ernesto Pernia said the COVID-19 outbreak could shave off 0.5 to 1 percentage point to the country’s gross domestic product (GDP).

This, therefore, could result in a wider national government deficit at 3.6% of the economy, higher than the administration’s budget gap ceiling of 3% of GDP.

“The corresponding increase in the borrowing level will provide financing for the increased deficit,” Dominguez said.

“That in itself is already a stimulus package. That’s another P90 billion we are going to pump in the economy,” the Finance chief said.

Dominguez said the increase in borrowing will be financed majority from domestic sources at around “three quarters” while foreign sources will compensate “a quarter” of the government’s debt.

Data from the Bureau of the Treasury showed the government’s debt soared to a record high of P7.73 trillion in 2019 — P5.13 trillion owed to domestic sources and P2.6 trillion from foreign investors.

“Our credit rating is quite robust and we don’t expect any difficulty in covering for potential deficit that might occur because of the expected drop in economic activity because of this COVID,” Dominguez said. —LDF, GMA News