The Philippines: Government prepared to hike borrowings – 26 Mar

  • The government is ready to increase the country’s debt level to help cushion the impact of the coronavirus disease 2019 or COVID-19, according to the Department of Finance (DOF).
  • At the same time, the DOF expects the country’s fiscal deficit to reach a level higher than initially estimated.
  • Finance Secretary Carlos Dominguez said the country’s deficit level may breach 4% of gross domestic product (GDP) in 2021, higher than the initial estimate of 3.6% due to the outbreak.
  • However, he said the figure would still depend on how long the contagion would last.
  • “I don’t want to give any specific numbers right now because I don’t know how low the tax collections will go. I don’t know how much more exactly we will spend. But certainly, close to probably a little more than 4% of GDP would be a reasonable number right now,” Dominguez said.
  • Citing estimates by the Development Budget Coordination Committee (DBCC), the finance chief said the outbreak may cut revenues by as much as PHP286.4bn if economic growth settles at 0% in 2020.
  • “Those are roughly the numbers, but at this point in time we don’t even have a very good estimate of what the GDP is going to look like. According to NEDA, it can be -0.66% to 4.33%. For sure, almost sure, the revenues from fuel will be down by about PHP14bn because of the combination of drop in demand and prices,” he said.
  • Despite this, Dominguez said the government still has no plan to cut its expenditure program.
  • Due to the expected drop in revenues, Dominguez said the government would need to increase its debt level in 2020.

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