Incoming administrations will have to raise P249 billion additional revenues in the next 10 years to pay the historic P3.2 trillion additional debt incurred following the COVID-19 pandemic, the Department of Finance said Wednesday.
The Philippine government will have borrowed P3.2 trillion over what the government initially planned to borrow in December 2019 by the end of the year, data released by the DOF on Wednesday showed.
“Pursuing the fiscal consolidation and resource mobilization program as proposed will help us continue to spend on socioeconomic programs, maintain our credit ratings, and grow out of our debt,” Finance Secretary Carlos Dominguez III said in an emailed statement.
“Taking action now is our responsibility to future generations,” he added.
The DOF said it has prepared a fiscal consolidation plan which would raise an average of roughly P284 billion annually, of which details were not immediately available.
The national government’s debt climbed to a record-high P12.68 trillion as of end-March, amid continuing borrowing efforts to boost the war chest against COVID-19.
GMA News Online has reached out to the DOF for more details on the matter.
Latest data available from the department show that the Philippines has so far incurred a total of $25.797 billion in terms of financing which includes loans and grants from overseas agencies as of January 14, 2022.
Budgetary support financing for COVID-19 response stands at $22.548 billion, grant assistance at $54.06 million, and project loan financing at $31.95 billion.
According to officer-in-charge Undersecretary Valery Joy Brion, the incoming administration has three options to finance the debt — increase borrowing, reduce spending, or raise revenues.
The DOF said the first two options were not viable options, since these would either increase the country’s debt-to-GDP level which already stands at 63.5%, or imperil the country’s economic recovery.
Brion said that the best way would be “to raise more revenues and improve tax administration, and for the government to channel resources from unnecessary and non-priority expenses to productive spending.”
Moving forward, Dominguez said the fiscal consolidation and resources mobilization is “necessary” to ensure that the long-term investments in education, health, infrastructure, and job creation are sustained. — RSJ, GMA News