MANILA - Bringing down the country’s debt, which ballooned during the pandemic, should be the first task of the next administration, said Finance Secretary Carlos Dominguez III on Tuesday.
Dominguez told members of the Financial Executives Institute of the Philippines (FINEX) that the next administration needs to reduce the country’s debt “at the soonest possible time.”
The Finance chief noted that the country’s debt-to-GDP ratio spiked to 60.5 percent in 2021, from a historic low of 39.6 percent in 2019, as the government borrowed heavily to fund its COVID-19 response.
“The only way to make this sustainable is by growing the economy faster and investing in the future. The fiscal deficit should be lowered to cover only infrastructure investments and not operational expenses,” he said.
Philippine debt stood hit a record P11.97 trillion In November last year, before slightly declining to P11.74 trillion at the end of the year.
In 5 and a half years, the administration of President Rodrigo Duterte nearly doubled the country's debt from P5.95 trillion at the end of June 2016.
Dominguez said debt reduction is part of the Department of Finance’s fiscal consolidation plan, which it is now completing for the next administration.
He said the country needs to outgrow its “pandemic-induced debt by ensuring that job-generating infrastructure investments far outweigh state spending on its operational expenses.”
After debt reduction, Dominguez said the second priority of the next administration should be quelling food inflation by accelerating the liberalization of the agriculture sector.
Its third task is to poverty incidence, which reached 23.7 percent in the first semester of 2021 because of the pandemic, the Finance chief said.
“Poverty incidence in 2015 was at 23.5 percent, which the Duterte administration was able to bring down to 16.7 percent by the beginning of 2019,” the DOF noted.
The fourth concern that should top the incoming administration’s must-do list is addressing the mounting problems associated with climate change—and the huge cost this entails—without having to strain the country’s fiscal resources, he said.
Economic managers are targeting GDP to grow 7 to 9 percent this year, after the economy grew at a faster-than-expected pace in 2021.