MANILA - Sen. Ralph Recto has filed a bill seeking to put a cap on the Philippines’ debt at 50 percent of the gross domestic product.
Recto noted that in 2018, the country’s debt-to-GDP ratio stood at P7.3 trillion or 41.8 percent of the GDP value of P17.4 trillion.
As of May 2019, the country’s debt stood at P7.8 trillion.
“It is better to impose a ceiling by law to shield the government, present and future, from piling up debt,” Recto said in a statement.
“We set it at 50 percent of GDP, with the prohibition that the national credit card shall not be maxed out.”
Recto said imposing a debt cap would “force government to observe credit discipline, constantly monitor the debt needle, and deliver them from the temptation of accepting donor-driven projects of dubious benefits to the people.”
The bill requires the finance secretary to submit to Congress, within 10 days from the end of every quarter, a written report on the country’s fiscal position and the modes of financing the government has undertaken during the period.
It also compels economic managers "to be more accurate and prudent in their targets on the revenue and expenditure program. Likewise, it allows Congress to assert its power of the purse,” Recto said.
The bill, however, allows the breaching of the debt cap when there are “extraneous factors” beyond government’s control. In such an event, the President will have to seek authority from Congress to raise the debt cap.
The government has said that it would raise borrowings to finance this year's spending program, including President Rodrigo Duterte's ambitious infrastructure push.