MANILA - The Philippines “has not and will not consider a moratorium on the national government’s debt obligations despite the 2019 coronavirus (COVID-19) pandemic," the country's finance chief said on Tuesday.
Finance Secretary Carlos Dominguez issued the statement amid calls to suspend debt payments because of the pandemic's impact on the economy.
“The strongest pillar of the Philippines’ standing in the global economic community is that the country honors its financial obligations– and, for that reason, investor confidence in our economy is broad and deep," Dominguez said.
He noted that even when the country's debt-to-GDP ratio hit as high as 78.3 percent in 1986, the Philippines still paid its debt.
The Philippines’ total debt-to-GDP ratio stood at 44.2 percent in 2019, while the actual debt-to-GDP ratio, which excludes guarantees, was down to 41.5 percent that year, the finance chief said.
Dominguez said a moratorium risked the country's reputation in the global financial market.
"If we lose our credibility among international lenders, we will lose our ability to access low-interest, concessional financing for our recovery and stimulus programs."
Sen. Imee Marcos, chair of the Senate committee on economic affairs, earlier said the government should consider suspending debt payments so it can fund the COVID-19 social amelioration program.
It was during the dictatorial regime of Marcos' late strongman father Ferdinand Marcos that the country's external debt ballooned.
Marcos said in a statement that the 2020 budget for interest payments amounts to P451 billion and principal amortization of P582 billion can be used instead for cash aid.
Dominguez said Marcos' figures include debt servicing for loans from domestic creditors, including pensioners and small depositors.
He said that around two-thirds of the country's debt is from local creditors.
"Senior citizen pensioners, for instance, rely on their investments in government debt instruments for their income," Dominguez said.
"Rather than take an option that will tank our long-term investment and borrowing prospects, we should burnish our reputation as a borrower and a business partner with integrity and palabra de honor because this ultimately benefits the Filipino people,” Dominguez added.
Dominguez earlier said the country has been working with multilateral institutions such as the Asian Development Bank (ADB), the World Bank, and the Asian Infrastructure Investment Bank (AIIB) for additional financing for its 4-pillar strategy against COVID-19.
The Philippines has an investment-grade credit rating from Fitch, S&P and Moody's, allowing it to access loans with lower interest rates compared to other developing countries.