MANILA, Philippines — While Finance Secretary Carlos Dominguez admitted that the country’s debt level amid the coronavirus pandemic is “high,” he assured that it remains “sustainable” and that the country can still manage to handle it.
During the weekly briefing with President Rodrigo Duterte, Dominguez said that the country’s expenditures amid the pandemic increased in 2020 and 2021, pushing the government to borrow money.
“What did we do? We had to borrow money because humina nga yung economy natin (our economy has weakened) because of the lockdowns tapos bumaba pa yung collections natin kasi humina ang businesses (collections remain low due to weak business conditions), so our borrowings went up from P1 trillion to P2.7 trillion in 2020 and will be around P3.1 trillion in 2021,” Dominguez said.
Dominguez explained that in 2019, the country’s total revenue was at P3.14 trillion while the expenditure was P3.8 trillion, giving a deficit of only around P666 million.
However, the deficit increased in 2020 and 2021, said Dominguez as he noted that the country’s revenue dipped to P2.86 trillion in 2020 while the expected revenue in 2021 is at P2.88 trillion.
Dominguez said this is lower than the expenditures for 2020 (P4.23 trillion) and 2021 (estimated at P4.7 trillion), thus increasing the deficit to P1.37 trillion in 2020 and P1.86 trillion in 2021.
“Of course the debt level has increased but we know it’s temporary, it’s not a permanent situation. Once we open the economy, our revenues will go back and once we beat COVID our expenditures for COVID will also go down so we’re going to be normal again probably in 2022, probably in 2023,” Dominguez said.
“We think that the debt level of our country is high but it is sustainable and we can manage to handle this debt in the coming years,” he added.
Dominguez likewise noted that due to tax reforms, the country’s credit rating “has been very strong and it has not been downgraded.”
“Ibig sabihin nyan pag na-downgrade kayo, mahihirapan kayong humiram o kung hihiram man kayo, mas mataas ang interes. Ang interes natin is quite low because our credit ating îs very good,” Dominguez said.
(Consequently, when you are downgraded, you will find it harder to borrow, or if you can borrow, the interest will be higher.)