MANILA – The Philippine economy must expand at a quicker rate than its pre-pandemic level of approximately 6 percent in order for the government to cut the debt accumulated as a result of the coronavirus disease 2019 (Covid-19).
Finance Secretary Carlos Dominguez III said in an interview over Bloomberg television on Thursday that there is no issue regarding the repayment of the debt incurred during the pandemic since these have favorable interest rates and terms, which is around 40 years.
“We’re not worried about the repayment. We have to really grow out of the debt. In other words, expand our economy by better than 6 percent per year, over the next five or six years,” he said.
According to the Department of Finance (DOF), it has raised around USD22.55 billion in budgetary support financing from the Asian Development Bank (ADB), the World Bank (WB), the Asian Infrastructure Investment Bank (AIIB), among others, and USD3.25 billion in grants and loans financing for projects and programs targeted to address the virus-induced crisis.
The inter-agency Development Budget Coordination Committee (DBCC) has set the gross domestic product (GDP) target for this year to between 7 to 9 percent, while it is between 6 to 7 percent for 2023-2024.
The volume of borrowings accumulated due to the pandemic, Dominguez said, is understandable given the need to boost financing amidst the drop in revenues because of the lockdowns.
“So the next administration will have to design policies and stick to very strict fiscal discipline to grow out of debt,” he said.
However, Dominguez stated that “everything is in place in the Philippines to achieve that”, citing the recovery of the domestic economy, which beat the government’s 5.5-percent target for 2021 after it expanded by 5.7 percent.
The impact of the Ukraine-Russia war, he added, is one of the risks this year.
According to Dominguez, while the Philippines is not directly affected by the war, it is affected by the rise in the prices of oil and commodities in the international market.
