MANILA, Philippines — Senate President Pro Tempore Ralph Recto has filed a bill limiting the country’s national indebtness at an amount not more than 50 percent of the national Gross Domestic Product (GDP).
In a statement Friday, Recto said the measure would not “handcuff the government” from securing loans to finance infrastructure projects “but merely sets the red line in the debt meter that this and future governments must not hit.”
“[I]t is better to impose a ceiling by law to shield the government, present and future, from piling up debt. We set it at 50 percent of GDP, with the prohibition that the national credit card shall not be maxed out,” Recto said.
“Having this limit will force government to observe credit discipline, constantly monitor the debt needle, and deliver them from the temptation of accepting donor-driven projects of dubious benefits to the people,” he added.
For 2018, the debt-to-GDP ratio stood at 41.8 percent, on a debt stock of P7.3 trillion and GDP value of P17.4 trillion, according to the senator. The national debt, however, has climbed to P7.9 trillion by May this year, and is on track of breaching the P8 trillion mark by end of this year, he added.
Using 2018 debt and GDP figures, Recto explained that government was “P1.4 trillion away” from his proposed debt cap that is equivalent to half of the GDP.
In Recto’s bill, total indebtedness includes those backed by the sovereign guaranty of the Republic of the Philippines.
The proposed law also defines other conditions which allow the debt ceiling to be “temporarily breached when there are extraneous factors beyond its control including occurrence of catastrophic emergencies of national proportion, as may be declared by the President, and upon consultation with both Houses of Congress.”
Recto also said the bill compels “economic managers to be more accurate and prudent in their targets on the revenue and expenditure program” and “allows Congress to assert its power of the purse.” /muf