Debt payment moratorium not an option to address COVID-19 emergency -Palace

The Philippines has no plans of deferring the payment of its loans to boost the government’s COVID-19 response funds due to its potential repercussions on the country’s credit standing, Malacañang said Thursday.

At a news conference, presidential spokesperson Harry Roque said a deferment may trigger cross default, which puts a borrower in default if the lendee goes into default on another obligation.

“Mas madugo po ang mangyayari diyan kung lahat po ng ating pagkakautangan ay sisingilin tayo ng sabay-sabay,” he said.

Roque reiterated that the government has enough funds to address the health crisis.

“At kung hindi po sapat ‘yan magbebenta muna ng ari-arian ang gobyerno bago tayo mag-default sa ating mga obligasyon,” he said.

Senator Imee Marcos has proposed a one-year postponement of interest payments to allocate more funds for the social amelioration program amid the COVID-19 crisis. She said the world’s major economies and Pope Francis have also called for debt relief to the poorest countries.

However, Finance Secretary Carlos Dominguez III said on Wednesday the Philippines could not wish away its obligations "when the reliability of our word secures our economy's capacity to bounce back once the COVID-19 pandemic is over.”

“More favorable options are available for financing our emergency and recovery programs. If we lose our credibility among international lenders, we will lose our ability to access low-interest, concessional financing for our recovery and stimulus programs,” Dominguez said.

In 2019, the Philippines’ total debt-to-GDP ratio or the amount of the country’s financial obligations relative to the size of the economy stood at 44.2%.

Actual debt-to-GDP ratio, which excludes guarantees, was down to 41.5% in 2019. --KBK, GMA News