DOF chief Recto tells senators: 'Nothing to worry about PH debt' | ABS-CBN
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DOF chief Recto tells senators: 'Nothing to worry about PH debt'
DOF chief Recto tells senators: 'Nothing to worry about PH debt'
Finance Secretary Ralph G. Recto answer questions during the during the economic briefing for the World Economic Forum (WEF) Country Roundtable in Manila at the Kalayaan Hall in Malacanang in Manila on March 19, 2024. PPA/Pool
Finance Secretary Ralph G. Recto answer questions during the during the economic briefing for the World Economic Forum (WEF) Country Roundtable in Manila at the Kalayaan Hall in Malacanang in Manila on March 19, 2024. PPA/Pool
MANILA — The country's rising debt is not a cause for worry, the Department of Finance said on Tuesday.
MANILA — The country's rising debt is not a cause for worry, the Department of Finance said on Tuesday.
Finance Secretary Ralph Recto told the Senate Finance Committee on Tuesday not to worry about the country's rising national debt levels, pointing out that it is commensurate to the country's economic growth.
Finance Secretary Ralph Recto told the Senate Finance Committee on Tuesday not to worry about the country's rising national debt levels, pointing out that it is commensurate to the country's economic growth.
The Senate on Tuesday kicked off the 2025 budget season with the briefing of the Development Budget Coordination Committee (DBCC).
The Senate on Tuesday kicked off the 2025 budget season with the briefing of the Development Budget Coordination Committee (DBCC).
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"We continue to manage our debt according to the highest standards of fiscal discipline, as we are very vigilant not to max out the Philippine national credit card. As of June, our gross financing stands at 61 percent of the full-year goal of P2.57 trillion. This includes our landmark $2 billion global bond issuance last May, which secured one of our most affordable and cost-effective borrowing costs," Recto said.
"We continue to manage our debt according to the highest standards of fiscal discipline, as we are very vigilant not to max out the Philippine national credit card. As of June, our gross financing stands at 61 percent of the full-year goal of P2.57 trillion. This includes our landmark $2 billion global bond issuance last May, which secured one of our most affordable and cost-effective borrowing costs," Recto said.
Recto explained that heavy bias on domestic financing has facilitated the continued redenomination of the country's debt into local currency, now representing 68.3 percent of total borrowings.
Recto explained that heavy bias on domestic financing has facilitated the continued redenomination of the country's debt into local currency, now representing 68.3 percent of total borrowings.
"Kaya hindi po kayo dapat mabahala, dahil ang utang na ito, galing po sa sarili natin. Ibig sabihin, karamihan ng interes na ating binabayad ay napupunta rin lang bilang dagdag na kita ng ating mga kababayan," said Recto, adding that they strategically favor long-term obligations to reduce reliance on short-term debt and minimize rollover risks.
"Kaya hindi po kayo dapat mabahala, dahil ang utang na ito, galing po sa sarili natin. Ibig sabihin, karamihan ng interes na ating binabayad ay napupunta rin lang bilang dagdag na kita ng ating mga kababayan," said Recto, adding that they strategically favor long-term obligations to reduce reliance on short-term debt and minimize rollover risks.
"Currently, long-term debts constitute 79.8 percent of our total portfolio," Recto added.
"Currently, long-term debts constitute 79.8 percent of our total portfolio," Recto added.
Recto said that the country's debt should not be seen at face value. Instead, the correct way to gauge it is by looking at the debt-to-GDP ratio, which Recto said has gone down since the pandemic.
Recto said that the country's debt should not be seen at face value. Instead, the correct way to gauge it is by looking at the debt-to-GDP ratio, which Recto said has gone down since the pandemic.
"Sa unang tingin, tila napakalaki ng ating utang na umaabot ng trilyon. Pero, uulitin ko, hindi po tayo dapat mabahala dito. Dahil hindi nasusukat ang utang ng isang bansa base sa pagtingin lang sa aktwal na laki nito. Mas tamang sukatin ang utang ng isang bansa kung ihahambing ito sa laki ng kanyang ekonomiya—dahil dito nalalaman ang kanyang kakayahan na bayaran ito." Recto said.
"Sa unang tingin, tila napakalaki ng ating utang na umaabot ng trilyon. Pero, uulitin ko, hindi po tayo dapat mabahala dito. Dahil hindi nasusukat ang utang ng isang bansa base sa pagtingin lang sa aktwal na laki nito. Mas tamang sukatin ang utang ng isang bansa kung ihahambing ito sa laki ng kanyang ekonomiya—dahil dito nalalaman ang kanyang kakayahan na bayaran ito." Recto said.
"Mula sa 60.9 percent noong 2022, bumaba na ito sa 60.1 percent noong 2023. And we are determined to continue pushing it below 60 percent so we have enough buffer in case another crisis hits us." Recto added.
"Mula sa 60.9 percent noong 2022, bumaba na ito sa 60.1 percent noong 2023. And we are determined to continue pushing it below 60 percent so we have enough buffer in case another crisis hits us." Recto added.
NOTHING WRONG WITH DEBT
Recto maintained there is nothing inherently wrong with a country having debts.
Recto maintained there is nothing inherently wrong with a country having debts.
"As long as the money is used for the right purposes such as growing the economy, which in turn, creates more jobs, increases income, and provides more revenues for the government."
"As long as the money is used for the right purposes such as growing the economy, which in turn, creates more jobs, increases income, and provides more revenues for the government."
Citing geopolitical tensions, Recto added that the cost of borrowings has climbed post-pandemic as central banks have raised their interest rates to combat inflation.
Citing geopolitical tensions, Recto added that the cost of borrowings has climbed post-pandemic as central banks have raised their interest rates to combat inflation.
Recto also credits the continuous decline in the debt-to-GDP ratio since the pandemic as one of the reasons why the country's credit ratings remain high.
Recto also credits the continuous decline in the debt-to-GDP ratio since the pandemic as one of the reasons why the country's credit ratings remain high.
Citing the 2024 budget, Recto also revealed that on average, the government spends over P15 billion daily, of which only over P11 billion is supportable by government revenues, leaving the rest to be financed by loans.
Citing the 2024 budget, Recto also revealed that on average, the government spends over P15 billion daily, of which only over P11 billion is supportable by government revenues, leaving the rest to be financed by loans.
Recto also reported that expenditures also grew by 14.6 percent mid-year to P2.76 trillion, equivalent to 21.9 percent of GDP while fiscal deficit for the first half stood at P613.90 billion.
Recto also reported that expenditures also grew by 14.6 percent mid-year to P2.76 trillion, equivalent to 21.9 percent of GDP while fiscal deficit for the first half stood at P613.90 billion.
Meantime, as a percentage of GDP, Recto said that the deficit remains very manageable at 4.9 percent in the first semester, below the 5.6 percent full-year target.
Meantime, as a percentage of GDP, Recto said that the deficit remains very manageable at 4.9 percent in the first semester, below the 5.6 percent full-year target.
Recto anticipates a 10.3 percent average annual growth in total revenues.
Recto anticipates a 10.3 percent average annual growth in total revenues.
TARGETS
According to the Philippine Statistics Authority (PSA) the country’s unemployment rate for June 2024 fell to 3.1 percent with 50.3 million employed individuals, albeit underemployment, or those not having enough paid work, rose by 12.1 percent or equivalent to 6.08 million Filipinos. Jonathan Cellona, ABS-CBN News
According to the Philippine Statistics Authority (PSA) the country’s unemployment rate for June 2024 fell to 3.1 percent with 50.3 million employed individuals, albeit underemployment, or those not having enough paid work, rose by 12.1 percent or equivalent to 6.08 million Filipinos. Jonathan Cellona, ABS-CBN NewsRecto also reported that the country is on track to meet the fiscal program for the year, having already achieved half of the targets.
Recto also reported that the country is on track to meet the fiscal program for the year, having already achieved half of the targets.
"As of mid-year, total revenues grew by 15.6 percent to P2.15 trillion. Of which, tax collections from the BIR and BOC totaled P1.84 trillion, 10 percent higher than last year. Non-tax revenues recorded a 63.3 percent growth, totaling P314.2 billion," Recto said.
"As of mid-year, total revenues grew by 15.6 percent to P2.15 trillion. Of which, tax collections from the BIR and BOC totaled P1.84 trillion, 10 percent higher than last year. Non-tax revenues recorded a 63.3 percent growth, totaling P314.2 billion," Recto said.
Recto touted the country's economic gains for the year.
Recto touted the country's economic gains for the year.
"Despite external headwinds, we have grown at an average of 6.1 percent since President Ferdinand Marcos, Jr. took office. This is among the fastest in the region," Recto said in his opening remarks.
"Despite external headwinds, we have grown at an average of 6.1 percent since President Ferdinand Marcos, Jr. took office. This is among the fastest in the region," Recto said in his opening remarks.
With favorable conditions, Recto said the country is on course to become an upper-middle-income country in the next years.
With favorable conditions, Recto said the country is on course to become an upper-middle-income country in the next years.
"Ibig sabihin nito, makakaasa tayong mas tataas ang kabuuang kita ng bawat Pilipino," Recto said.
"Ibig sabihin nito, makakaasa tayong mas tataas ang kabuuang kita ng bawat Pilipino," Recto said.
"We lifted 2.5 million Filipinos out of poverty, dropping the poverty rate to 15.5 percent. If we are able to elevate almost 8 million more Filipinos above the poverty line in the next four years, we will achieve our goal of reducing the poverty rate to a single digit or 9 percent by 2028."
"We lifted 2.5 million Filipinos out of poverty, dropping the poverty rate to 15.5 percent. If we are able to elevate almost 8 million more Filipinos above the poverty line in the next four years, we will achieve our goal of reducing the poverty rate to a single digit or 9 percent by 2028."
Recto noted that the unemployment rate is at a historic low.
Recto noted that the unemployment rate is at a historic low.
Aside from the DOF, the DBCC briefing includes the Bangko Sentral ng Pilipinas for their insights on monetary policy and economic stability to set the stage for our fiscal strategies, the National Economic and Development Authority (NEDA) for the macroeconomic foundations of the budget and recent economic trends, and the Department of Budget and Management (DBM) for the discussion of the proposed 2025 national budget.
Aside from the DOF, the DBCC briefing includes the Bangko Sentral ng Pilipinas for their insights on monetary policy and economic stability to set the stage for our fiscal strategies, the National Economic and Development Authority (NEDA) for the macroeconomic foundations of the budget and recent economic trends, and the Department of Budget and Management (DBM) for the discussion of the proposed 2025 national budget.
Senate Finance Committee chair Grace Poe assured the public that senators will work to make sure next year's budget is responsive to the needs of the country.
Senate Finance Committee chair Grace Poe assured the public that senators will work to make sure next year's budget is responsive to the needs of the country.
"Today's hearing aims to shed light on how the budget aligns with our macroeconomic objectives and its anticipated effects across different sectors of our society... As the voice of the Filipino people, we will ensure that the budget reflects our collective priorities and meets the diverse needs of our citizens," Poe said.
"Today's hearing aims to shed light on how the budget aligns with our macroeconomic objectives and its anticipated effects across different sectors of our society... As the voice of the Filipino people, we will ensure that the budget reflects our collective priorities and meets the diverse needs of our citizens," Poe said.
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