Next administration to inherit 'better economy', higher debt: BSP Gov. Diokno

Jessica Fenol and Michelle Ong, ABS-CBN News

Posted at May 02 2022 11:26 AM

President Rodrigo Roa Duterte receives the uncut 50-outs of 1000-Piso Polymer Banknotes from Finance Secretary Carlos Dominguez III and the Chairman of the Monetary Board and Governor of Bangko Sentral ng Pilipinas Benjamin Diokno during the presentation at the Malacañan Palace on April 6, 2022. Rey Baniquet, Presidential Photo/File
President Rodrigo Roa Duterte receives the uncut 50-outs of 1000-Piso Polymer Banknotes from Finance Secretary Carlos Dominguez III and the Chairman of the Monetary Board and Governor of Bangko Sentral ng Pilipinas Benjamin Diokno during the presentation at the Malacañan Palace on April 6, 2022. Rey Baniquet, Presidential Photo/File

MANILA - The next administration will inherit a "much better economy" but with an increased debt-to-GDP ratio due to the COVID-19 pandemic, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday.

In an interview with ANC, Diokno said the next administration would start office with tax and other economic reforms in place.

The Duterte administration has pushed for the Comprehensive Tax Reform Package (CTRP), which includes the Tax Reform for Acceleration and Inclusion (TRAIN) and Corporate Recovery and Tax Incentives for Enterprises (CREATE) laws, among others.

Before his tenure ends, Duterte had also enacted the amendments to the Retail Trade Act, the Public Service Act as well as the Foreign Investment Act.

"This administration will inherit a much better economy than what we inherited from the previous one. But at the same time, it is faced with an increase in public debt as a result of the pandemic," Diokno said. 

Before the pandemic, the Philippines' debt-to-GDP ratio was at 39.6 percent but it has ballooned to 60.5 due to the heavy borrowings to finance the country's COVID-19 response and recovery efforts.

Despite the elevated borrowings, Diokno said the level is still manageable as long as the next administration ensures steady economic growth.

"But this level is pretty much manageable as long as we continue to grow between 6 to 7 percent within 2 years," he said.

Diokno also recommended that the next administration prepare a "fiscal consolidation program" for the next 3 years.

The program should include efforts for reducing debt, continuing infrastructure programs, investing in human resources, improving the tax spending mix of local governments and rationalizing the pension benefits of military personnel, he said. 

The Philippines will hold its presidential elections on May 9. 

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