The aggressive borrowing during the Duterte administration due to the COVID-19 pandemic, which brought debt levels to a 17-year high, will no longer be seen in the Marcos administration, Finance Secretary Benjamin Diokno said Tuesday.
“We do not have to borrow as much as we did during the crisis years,” Diokno said in his remarks during the Post-State of the Nation Address (SONA) Economic Briefing in Pasay City.
As of end-May 2022, the national government’s outstanding debt stood at P12.495 trillion, of which P8.66 trillion were sourced locally while P3.83 trillion were from foreign sources.
As of the first quarter of the year, the country’s debt-to-gross domestic product (GDP) ratio — the size of the state’s debt relative to the size of the economy — stood at 63.5%, its highest in 17 years and well over the internationally recommended threshold of 60% of the economy.
The previous administration is projected to incur P3.2 trillion in additional debt following the COVID-19 pandemic, which could bring the debt level to reach P13.1 trillion by the end of 2022, above the original plan of only around P9.9 trillion.
Diokno reiterated Marcos’ commitment during the President’s first SONA, in which he said that the country’s debt would be less than 60% debt-to-gross domestic product (GDP) ratio by 2025.
The Finance chief is banking on the fiscal reforms implemented by the Duterte administration such as the Tax Reform for Acceleration and Inclusion and Corporate Recovery and Tax Incentives for Enterprises laws.
“As I mentioned, what we inherited from the Duterte administration is a much better tax system,” Diokno said.
“That in itself would give us additional revenues, plus, of course, on our part we have additional measures,” he said.
The Marcos administration is seeking to impose tax on digital transactions which could generate P11.7 billion next year.
Diokno told reporters that the tax on digital transactions will be in the form of value-added tax (VAT).
The Finance chief said the VAT rate for digital transaction will be the same as rate as being charged on purchases from traditional or physical stores. — RSJ, GMA News