'I've seen the worst': Incoming DOF chief Diokno optimistic of economy despite headwinds

Jessica Fenol, ABS-CBN News

Posted at May 27 2022 10:32 AM | Updated as of May 27 2022 11:07 AM

Central Bank Governor Benjamin Diokno holds newly minted set of 20-peso and Enhanced 5-peso NGC coins at the Executive Business Center at the Bangko Sentral ng Pilipinas, (BSP) in Manila on Dec. 17, 2019. Jonathan Cellona, ABS-CBN News/File
Central Bank Governor Benjamin Diokno holds newly minted set of 20-peso and Enhanced 5-peso NGC coins at the Executive Business Center at the Bangko Sentral ng Pilipinas, (BSP) in Manila on Dec. 17, 2019. Jonathan Cellona, ABS-CBN News/File

MANILA - Bangko Sentral ng Pilipinas Governor Benjamin Diokno, who is also the incoming finance secretary, on Friday said he is not worried about the ballooning national debt due to the country's stronger economy.

The country's debt reached P12.68 trillion in March, out of which a total of P3.2 trillion were from recent as well as COVID-19 borrowings. This brought the country's debt-to-GDP ratio to 63.5 percent or above the international standard of 60 percent.

"I think I have the benefit of having served the government around more than 30 years and I’ve seen all the crises. I’ve seen debt-to-GDP ratio close to 100 [percent]. I’ve seen the worst of the Philippines… We are in a better place right now," Diokno told ANC. 

"I’m not worried about the level of the debt that’s 63 percent. That’s easily manageable as long as the economy can grow by 6 to 7 percent which is our recommendation. Before the crisis we can easily outgrow our debt," Diokno said.

Diokno said the country also has a sound tax structure and that the focus should be on sustaining the growth trajectory of the economy to solve problems.

Keeping an accelerated growth pace "could solve many problems," Diokno said when he was asked about the Department of Finance's proposed fiscal consolidation plan to pay the debt.

The DOF proposed widening taxes, VATs, and deferring personal income tax reductions, among others, to generate revenues for debt payments. 

President-elect Ferdinand Marcos Jr. earlier said his Cabinet needs to establish an economic program to guide fiscal policy, which includes debt repayment. 

Diokno said he is fine with the pending packages under the Comprehensive Tax Reform Program (CTRP) but "other than that, we are happy with the present tax structure."

"For me, the focus should to sustain growth...Everything goes to growth so our focus should be on how do we make all our sectors grow.. Our problem really is to get back on our growth trajectory because that will solve a lot of problems ," he added.

"We grow at 6 to 7 percent that solves our tax revenue problem that will solve our deficit problem, that will solve our debt problem," Diokno said.

To keep the economy growing, the incoming finance chief said he would bring back the term golden age of infrastructure and continue the Build, Build, Build program.

"I think that should be continued because it creates a lot of jobs, high quality jobs and it expands the capacity of the economy because now," Diokno said.

The amended public service act (PSA) will also be key to economic growth since it would allow foreigners to invest in select sectors such as telco or airports, among others, with no cap on ownership. 

The country's gross domestic product (GDP) expanded by 8.3 percent in the first quarter, which makes the revised growth target of 7 to 8 percent "doable," Diokno said, adding that the second quarter GDP could be higher.

"I think the second quarter will do even better," he said.

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