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Philippine Debt to Swell to P 9.59T as Gov’t Borrows More to Fight COVID-19

PH debt to swell to P 9.59T as gov’t borrows more to fight COVID-19

This year’s expected weak revenue take has forced the government to borrow more and in the process jack up the debt stock to a record-high P9.59 trillion by year’s end.

The Cabinet-level Development Budget Coordination Committee’s (DBCC) projected end-2020 outstanding debt level is equivalent to 49.8 percent of gross domestic product (GDP), Finance Undersecretary Gil S. Beltran told the Inquirer.

National Treasurer Rosalia V. de Leon said that the Bureau of the Treasury was still finalizing the adjusted 2020 borrowings program and its mix.

Under the 2020 national budget, the national government’s outstanding debt was supposed to reach P8.8 trillion this year or 44.4 percent of GDP, on the back of a record P1.4 trillion in gross borrowings programmed for the year.

But actual borrowings will exceed the original program as the government plans to borrow an additional P310 billion from foreign lenders to augment funds under the Duterte administration’s four-pillar socioeconomic strategy against COVID-19.

So far, the Philippines already secured $1.7 billion in loans from the Manila-based Asian Development Bank (ADB) and $600 million from the Washington-based World Bank.

The Beijing-based Asian Infrastructure Investment Bank (AIIB) is expected to approve this month a $750-million loan for the Philippines’ COVID-19 response.

Finance Secretary Carlos G. Dominguez III earlier said that the Philippines was in talks with China, France, Japan and South Korea for bilateral program loans to support the fight against the pandemic.

Economist Bernardo M. Villegas told a forum on Friday that the government had been “very disciplined fiscal-wise,” so even higher public borrowings during these times of crisis would augur well to the economy.

The debt-to-GDP ratio declined to a record-low 39.6 percent in 2019. As such, Villegas said “the government can afford to borrow a lot to be able to prime the pump.”

For Villegas, private consumption, which accounted for 70 percent of GDP, and government expenditures would be the two engines of economic recovery post-pandemic.

In the meantime, the government will have to rely on more borrowings given expectations of weak collection of tax and non-tax revenues amid the COVID-19 crisis hurting not only the healthcare sector but also the economy.

Last Tuesday, the DBCC slashed this year’s revenue collection target to P2.61 trillion from the March projection of P3.17 trillion and the original 2020 program of P3.49 trillion.

The 2021 revenue goal was also reduced to P2.93 trillion from P3.85 trillion previously, while the 2022 program fell to P3.27 trillion from P4.31 trillion.

The economic team projected GDP to decline by 2-3.4 percent this year, while imports would likely drop by 5.5 percent.

The share of revenues to GDP was estimated to decline to 13.6 percent from 16.1 percent in 2019.

On the other hand, expenditures on public goods and services were now estimated by the DBCC to hit P4.18 trillion for the entire year, higher than the P4.16 trillion programmed last March as “the emerging disbursement program takes into account the releases for COVID-19 initiatives charged to savings coming from austerity measures, among others.” —Ben O. de Vera



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  • hellraiser2.hellraiser2. PEx Veteran ⭐⭐

    Recto Bank as collateral for China loan? Nothing wrong – Panelo

    There is nothing wrong if the government used gas-rich Recto Bank as collateral for a $62-million loan agreement with China, Malacañang said on Monday.

    “For me [China seizing Reed Bank should there be a default in the repayment of the loan] is … not a possibility because we never reneged,” presidential spokesperson Salvador Panelo told reporters, using the international name of Recto Bank.

    Carpio warning

    Panelo was commenting on the warning of Supreme Court Senior Associate Justice Antonio Carpio during a presentation at Pamantasan ng Lungsod ng Maynila on Friday that China could seize Recto Bank if the Philippines failed to repay the loan for the Chico River Pump Project in Kalinga province.

    Panelo said he had not yet seen the loan agreement for the river project. But assuming that what Carpio had said was true, he said he was standing by his statement.

    On whether the loan agreement favored China, Panelo likened it to a bank loan for which “the terms of the bank” were followed.

    “It’s only natural that they will make sure that they will not lose from the loan to us,” he said.

    But that provision is “useless” because China knows the Philippines can repay the loan, he said.

    Panelo said he believed the economic managers allowed the provision because they knew the country could repay the loan.

    He said he did not think the terms were unconstitutional because the definition of patrimonial assets was unclear.

    On Carpio’s statement that the loan contract is expected to be the template for other loan contracts with China, Panelo said: “[I]f we show the Chinese government that we are on time, regularly paying, if you were the … lender … you will know the borrower is good and there is no need to impose onerous conditions [on] them. So not necessarily that this will be the template.”

    ‘Standard’ terms

    He added: “The onerous conditions that some are saying [are] incorporated in the contract [are] standard between lender and borrower to be sure that the lender will be getting what they have lent to the borrower.”

    Seismic surveys have indicated that Recto Bank is rich in oil and gas deposits.

    The UN-backed Permanent Court of Arbitration in The Hague ruled in 2016 that Recto Bank is within the Philippines’ exclusive economic zone in the South China Sea, meaning the country has sole sovereign right to explore resources there.

    China, which claims Recto Bank, rejected the ruling

  • LightKnightLightKnight PExer
    edited May 27
    Big mistake, when will politicians ever learn?  But they never will, because they are not required to pay these loans, we are. 

    We need a constitutional amendment that will ban the govt from borrowing money or imposing mandatory taxes.  Enough is enough.  

    The govt is the problem, not the solution. 

    Make taxation voluntary.  If the govt does its job well, people will voluntarily pay taxes, if it does not , people should be allowed to refuse to pay taxes.   It is long overdue.
  • _knorr__knorr_ PEx Influencer ⭐⭐⭐
    edited June 12

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  • LightKnightLightKnight PExer
    edited June 12
    The govt does not need to borrow money, it just wants to borrow money because our govt officials are not required to pay back these loans from their own pockets. 

    We the people, are required to pay back these loans. We should not allow the govt to borrow money.

  • hellraiser2.hellraiser2. PEx Veteran ⭐⭐

    Ang walang katapusang untang ina mo

    Philippines eyes to raise P400B from loans for COVID-19 recovery efforts

    The Philippines will borrow at least P400 billion to support the COVID-19 economic recovery efforts, an official of the Department of Finance said Tuesday.

    Finance Assistant Secretary Antonio Lambino II said the funding will come from the World Bank, the Asian Development Bank (ADB), and the Asian Infrastructure Investment Bank (AIIB) and other financial institutions.

    “Meron po tayong binubuo na mga pondo para po ma-finance po natin ang ating economic recovery plan,” Lambino said in a televised briefing.

    As of June 11, the Philippine government has raised a total of $6.4 billion (more than P300 billion) from loans extended by the World Bank, AIIB, and the ADB as well as the recent dual-tranche issuance of US dollar-denominated global bonds, according to President Rodrigo Duterte’s report to Congress on Monday.

    Economic managers have projected that revenue collection this year will be lower at 13.6% of the gross domestic product (GDP) at P2.61 trillion compared to expected spending level at P4.18 trillion or 21.7% of GDP due to the economic fallout resulting from the health crisis.

    This led to a projected increased deficit level at P1.56 trillion or 8.1% of GDP, higher than the earlier assumed 5.3% in March. To finance the deficit, economic managers see an increase in borrowing which will be around 50% of GDP.

    World Bank senior economist in the Philippines Rong Quian said on June 9 that the Philippines can still borrow due to its “strong macroeconomic fundamentals.” 

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