Economist explains why it’s possible Sri Lanka debt crisis could happen in PH

ABS-CBN News

Posted at May 28 2022 10:39 AM | Updated as of May 28 2022 01:25 PM

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MANILA – An economist on Saturday urged the incoming administration to prioritize payment of the Philippines' rising debt and address the negative effect of Russia's war against Ukraine on food and fuel prices to prevent an economic crisis similar to Sri Lanka.

Emmanuel Leyco said with a huge political capital, President-elect Ferdinand Marcos Jr. could call for a review of the country's more than P4-trillion spending plan as there might be "many assumptions not factored" in the budget.

"Tama na magkaroon ng economic summit kasama ang ating mga mambabatas, negosyante, mga business sector para upuan ang ating mga isyu pangkabuhayan dahil malaki ang problema ng ating global economy, kailangan tayo maghanda," Leyco said in an interview on TeleRadyo. 

"Lahat ng sektor ay dapat natin dalhin sa iisang usapan para magkaroon tayo ng economic agenda, programa ngayong taon na ito, magkaroon tayo ng programa sa susunod na taon at magkaroon ng commitment lahat ng sektor."

The government must also look for measures to pay its nearly P13 trillion debt to prevent cash flow interruptions, said the economist.

The Department of Finance suggested to the incoming administration imposing new taxes and a wider value-added tax (VAT) coverage to generate at least P349-billion revenue to pay the country's rising debt.

"Malaki ang posibilidad (Sri Lanka crisis). Isang posibilidad ’yan. Hindi lang naman sa Sri Lanka nangyari yan. Nangyari na rin yan sa Greece, Brazil, Mexico, Venezuela ... Hindi imposible na mangyari sa atin ’yan. Nangyari sa kanila, hindi sila makabayad ng utang on time," he said. 

"Kaya nasa batas natin ’yan. Unahin natin ang pagbabayad ng utang. Pero para makabayad tayo ng ating pagkakautang, marami tayong mga programa na magkakaroon ng epekto, na maapektuhan."

Payment of debt does not necessarily mean the country's economy would get better, according to Leyco. Some sectors may operate on depleted funds just so government can pay, he added. 

"Hindi po kasi kung ang pondo na pambayad ay kukuhanin sa pondo na pantustos ng programa sa kalusugan, edukasyon, pambayad ng sweldo. Malaking problema ’yan para sa pamahalaan at malaki ang problema sa ating bayan," said Leyco.

The Department of Agriculture (DA) had warned of a "looming food crisis" globally amid Russia's war with Ukraine and the COVID-19 pandemic.

The Philippines is prepared for this challenge, said the agency, as it has enough supplies of food, and the DA is looking to further increase production.