Philippines: No debt trap from aggressive infra spending: DBM – 15 Jul 2017

  • The Philippines will not fall into a debt trap as a result of the Duterte administration’s ambitious public spending program, the Department of Budget and Management (DBM) said on 14 Jul 17
  • The government is planning to pursue an expansionary fiscal policy, increasing its budget deficit ceiling from 2% to 3% of GDP annually. This is to finance the country’s “Build Build Build” program which will require up to PHP9tr in investments until 2022.
  • The deficit will be plugged through government borrowings, 80% of which will come from domestic sources and 20% from foreign lenders, according to the DBM.
  • Despite the planned increase in the deficit, the DBM expressed confidence the Philippines’ economic expansion (which is targeted to reach 6.5 – 7.5% in 2017 and 7 – 8% from 2018 to 2022) will outpace debt.
  • This, in turn, will pull down the debt ratio to 38.1% in 2022 from 40.6% in 2016. Furthermore, the DBM said the economy has enough gross international reserves, which can currently cover 11.7 months’ worth of imports.

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