MANILA -- The Philippine government’s borrowings will drop to P2.25 trillion in 2022 from the P3 trillion expected this year, Finance Secretary Carlos Dominguez said.
"These borrowings will support both our public health response and the economic investments needed to spur growth," he told the House Committee on Appropriations.
Dominguez said public borrowing remains well within sustainable levels.
He added, however, that the national government debt-to-GDP ratio is projected to slightly increase to 60 percent in 2022 from the programmed 59 percent ratio in 2021.
But Dominguez assured lawmakers that this is temporary.
"It did not stem from profligate public spending, but rather resulted from a universal shock that deteriorated the financial positions of almost all countries around the world," he explained.
"The principal contributors to the increase in our debt are the weakening of the economy and lower revenue collections due to the lockdowns, both of which are expected to recover quickly as soon as the infections are contained.”
Dominguez likewise noted that they expect government revenues to exceed expenditure in 2022.
"From 2022 onwards, we expect revenues to exceed expenditure growth. We estimate the budget deficit to decrease to 7.5 percent of GDP next year, from the 9.3 percent of GDP projection for 2021. The medium-term fiscal program will follow a declining deficit path. By 2024, our deficit-to-GDP ratio will settle at 4.9 percent,” he added.
The Philippines' debt has risen steadily during President Rodrigo Duterte's term, hitting nearly P11.17 trillion at the end of June this year. This was almost double the P5.9 trillion debt at the start of Duterte's term in 2016.
INFRA VS COVID RESPONSE?
Dominguez meanwhile also defended the administration’s infrastructure program despite the calls from critics to realign these funds to COVID-19 response.
Earlier this year, workers groups called on the government to postpone some infrastructure and other government projects, and use the funds for COVID-19 assistance.
This week, some of the country's largest business groups also called on the government to shift its focus from infrastructure projects, which won't be of immediate use, to addressing current transport problems which they said were holding back economic recovery.
"The Duterte administration maintained a prudent deficit level notwithstanding our large investments in the Build, Build, Build program, which is the President’s main strategy to help Filipinos lift themselves out of poverty," Dominguez said.
"Last year, despite the effects of the pandemic, we were able to maintain our infrastructure expenditures at 4.8 percent of GDP."
An independent think tank meanwhile rejected government claims that infrastructure spending would counter the economic impact of the pandemic.
IBON Foundation pointed out that rapidly increasing infrastructure budgets since 2017 have not stopped the economy from slowing for three consecutive years even before the pandemic struck.
The group said that part of the reason for this is that large parts of infrastructure spending leak abroad when paid to foreign suppliers and contractors.