The Philippines: Diokno sees no need for spending cuts

  • THE INCOMING Marcos administration will not reduce government spending to address the ballooning budget deficit, Finance chief-designate and Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.
  • “There should be no cut in our expenditure plan. I think we should really focus on raising enough taxes. I’m confident that because of the tax system that the Duterte administration will leave… we will be able to raise enough taxes to ensure we will meet our deficit targets,” he told ABS-CBN News Channel on 6 Jun 22.
  • Mr. Diokno, who was picked by President-elect Ferdinand R. Marcos, Jr. to head the Finance department, said they will stick to the plan to bring down the government’s budget deficit to 3% of gross domestic product (GDP) by 2028.
  • For 2022, the budget deficit ceiling is set at PHP1.65tr, which is equivalent to 7.7% of GDP. Economic managers set the budget gap ceiling at 6% of GDP for 2023, 5.1% for 2024 and 4.1% for 2025.
  • Asked if he will support proposals to impose new taxes, Mr. Diokno said the recent tax reforms would provide the next administration with enough room to generate enough revenues.
  • Meanwhile, Department of Finance (DoF) Chief Economist Gil S. Beltran said the country’s outstanding debt would have ballooned to over PHP15tr in 2022, if not for the government exercising fiscal prudence.
  • During the pandemic, Congress passed Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act and RA 11494 or the Bayanihan to Recover as One Act.
  • The DoF cited a report by its Domestic Finance Group (DFG) showing that proposed COVID-19 stimulus bills and other revenue eroding measures would have led to additional spending amounting to at least PHP2.2tr if they were passed by Congress.

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