Dominguez defends debt program, says uptick only temporary

Finance Secretary Carlos Dominguez III on Thursday defended the uptick in the country’s programmed debt which will hit the internationally recommended threshold of 60% proportion of gross domestic product by 2022.

During the budget deliberations, Dominguez said the national government debt-to-GDP ratio is projected to increase to 60% in 2022, up from the programmed 16-year high of 59% this year, equivalent to P11.73 trillion.

The government earlier vowed to keep the country’s debts at a “sustainable and responsible level” or within the 60% threshold. A lower debt-to-GDP ratio is generally seen as favorable, as it indicates that the country is able to repay its debts.

This is then predicted to ease to 60.7% in 2023, and then to 59.7% in 2024.

“I would like to emphasize again that the increase in our debt level is only 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,” Dominguez said.

“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,” he added.

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Data released by the Bureau of the Treasury (BTr) show that the national government’s running debt balance widened to a record-high of P11.166 trillion as of end-June, up 0.9% from May’s P11.071 trillion.

“To achieve a solid recovery, we need to ensure that fiscal responsibility is constantly observed,” Dominguez said, noting that the Executive and Legislature must work together in combating the pandemic and keep the debt-to-GDP ratios within reasonable levels.

“Fiscal discipline will save us from this long battle against the pandemic,” he added.—AOL, GMA News