The Philippine government is expected to borrow more than P1 trillion to cover the projected budget deficit next year, Finance Secretary Benjamin Diokno said Friday.
During the House of Representatives budget briefings, Diokno said that “total revenue projections in 2023 was P3.6 trillion” against a proposed budget of P5.268-trillion.
The Finance chief said that the “projected expenditures is P5.1 trillion and there will be a deficit of P1.16 trillion.”
Albay 1st District Representative Edcel Lagman asked if the projected budget shortfall would be financed through new borrowings.
Diokno responded in the affirmative.
“We have to finance [through borrowings]. We will rely heavily on domestic sources so there will no foreign exchange risks,” the Finance chief said.
He said that 75% of borrowings will be sourced locally while 25% will be from foreign sources.
Despite the projected amount of borrowings next year, the Finance chief said that “our needs for borrowing will decline significantly because I don’t think we will have another pandemic in the near future.”
To recall, the Finance chief earlier said that the government would no longer borrow as much as what was done during the Duterte administration.
“What is really relevant is debt as a percentage of GDP (gross domestic product), the size of the economy, and that has been declining,” Diokno said during the House hearing.
As of end-June 2022, the debt-to-GDP ratio stood at 62.1%, lower than the 63.5% debt level as a percentage of GDP in the first quarter of the year.
As of end-June, the Duterte administration's last month in office, the national government’s debt stock amounted to P12.79 trillion as the then administration embarked on a borrowing spree to boost state coffers to respond to the COVID-19 pandemic.
Among its expenditures, the then government provided cash aid to vulnerable sectors and procured vaccines to immunize the population as it implemented hard lockdowns to control the spread of the disease, causing economic activity to contract which affected state revenue collection.
“Our debt-to-GDP ratio will progressively decline. It will be somewhere in the neighborhood of 50% by the end of 2028,” Diokno said.
The Finance chief said earlier that the debt-to-GDP ratio would gradually decline to 61.8% this year, 61.3% by 2023, 60.6% by 2024, and 59.3% by 2025.
By the end of the Marcos administration in 2028, the debt level will be down to 52.5%.
Before the COVID-19 pandemic, the country’s debt-to-GDP ratio hit a record low of 39.6%.
“Our economy will also increase… our debt in relation to the size of economy that is actually declining. Our current situation is much, much better than before,” Diokno said. — DVM, GMA News