Finance Secretary Carlos Dominguez expects “healthier Filipinos” to repay the Philippines’ debt as the government plans to borrow up to 50 percent of the gross domestic product amid the coronavirus disease 2019 pandemic.
“The repayment will come from our taxes in the future. And our taxes will come from healthier Filipinos working from returned economic growth starting next year. So the debt is very manageable, and it is affordable for us,” Dominguez said in a July 8 forum held in the lead-up to this year’s State of the Nation Address.
The Finance Secretary described the COVID-19 pandemic as a “black swan event that no one anticipated and was truly prepared to deal with.” The Great Depression or period of a general decline in economies globally between 2007 and 2009 was also called a “black swan.”
Dominguez explained that although the country’s debt-to-GDP ratio will now be higher than 39 percent in 2019, the target will still be “very affordable mainly because the cost is very low.” The interest rate on the debts being taken out now “is quite historic lows,” he added.
“And one of the reasons is that our credit rating is very good,” the finance chief said.
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The COVID-19 crisis has already forced the government to borrow P1.22 trillion from January to April 2020 alone. The amount exceeded the P1.02-trillion gross borrowings for the entire 2019. Dominguez said the government had spent P375 billion so far for its COVID-19 response.
Despite the swelling debt, Executive Secretary Salvador Medialdea claimed the country was on its way to economic recovery.
“The President’s priority is clear – to save lives and protect communities,” Medialdea stressed.
“As we transition to the new normal, your government’s pagkalinga (care) will take the form of a strong economic rebound. We shall save and restore as many livelihoods as we can,” Medialdea said. “The whole of government is working round-the-clock to minimize the socioeconomic impact of this pandemic, and to ensure our sustainable recovery.”
Dominguez insisted that the economically devastating lockdown was worth it because it “helped prevent as much as 1.3 to 3.5 million infections,” citing epidemiological models by FASSSTER Project and the University of the Philippines COVID-19 Pandemic Response Team.