MANILA - The Philippine government needs around P326 billion in new revenues annually to pay for COVID-19 debts, a lawmaker said Monday.
The Philippines recorded over P12.68 trillion in debt as of the end of March, partly due to pandemic borrowings as well as capital to fund the country's ambitious infrastructure program.
In a statement, Albay 2nd District Rep. Joey Salceda who heads the Lower House's tax-writing panel, said the P326 billion yearly fund would cover both the principal and interest payments.
"Unless we can raise that kind of revenue, we will have to downscale our public spending or borrow again to pay the debt," the chair of the House Ways and Means Chairman said.
Salceda was a former economic adviser to former President Gloria Macapagal-Arroyo.
"This is the amount needed if you want to stretch out the payment schedule, that’s the kind of fiscal space you need to cover the COVID-19 debts without incurring budget cuts,” he added.
The country's debt-to-GDP ratio also ballooned to 63.5 percent in March.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said this level of debt remains manageable but the next administration must keep the economic growth robust.
Socioeconomic Manager Karl Kendrick Chua said the next administration should be "prudent" and should "live within their means" to keep a strong macro-fiscal position.
Salceda also noted that good fiscal standing is crucial since the debt relies on current interest rates. The Philippines' investment grade ratings enable the country to borrow with lower interest rates and longer payment periods. But it must keep key economic indicators healthy to keep ratings at their current levels.
"To keep them at this level, we need to show our creditors we are in good fiscal standing. So tax policy reform is really our best option," he said.
Both Chua and Salceda recommended the implementation of reforms that would lead to increased income generation and attract foreign investments.
With presumptive president Ferdinand Bongbong Marcos Jr's "supermajority" win, Salceda said he could use his congressional alliances "to enact smart, efficient tax and economic policies to address this debt overhang."
He said he would recommend to the tax bureau the creation of digital taxation service, transfer pricing service and ease of paying taxes reforms.
The new administration will inherit a better economy but with higher debt as well as surging inflation.
Analysts and key economic managers have recommended the new economic cluster to prioritize addressing these concerns to avoid further repercussions.
The economy grew 8.3 percent in the first quarter of 2022, a significant reversal compared to the 3.8 percent contraction in the same period last year.