Diokno: Philippines’ debt woes won’t reach Sri Lanka’s level

Finance Secretary Benjamin Diokno on Tuesday said the Philippines' debt problems will not go down to Sri Lanka's level.

"Well, I can assure you, your honor, that we won't go the Sri Lanka way. We are very careful in our borrowings. In fact, as the treasurer said, I think most of our debt is long term," Diokno told the Senate ways and means committee when asked by Senator Sonny Angara to give the panel an assurance that the country's debt is still at a manageable level.

Angara, vice chairperson of the committee, mentioned that there have been speculations comparing the debt situation of the Philippines and Sri Lanka.

Diokno attributed his optimism to former Finance Secretary Carlos Dominguez III's policy to borrow at the lowest possible interest rate.

"Secretary Dominguez has been very good in making sure that we borrow at the lowest possible interest rate and it is spread out. Plus, I think what you've done, because you have strengthened the tax system," Diokno said.

"I think we should be able to service whatever we borrowed down the road. So I can assure you, Mr. Chairman and members of the committee that in fact, that is the purpose of that medium-term fiscal framework to make sure that we don't go the Sri Lanka way," he added.

Last week, Bureau of Treasury data showed that as of end-June 2022, the country’s debt-to-GDP ratio stood at 62.1%, lower than the 63.5% debt level as a percentage of GDP in the first quarter of the year.

This is still above the internationally recommended ceiling of 60% of public debt’s share to the economy.

The Marcos administration is targeting to bring down the debt-to-GDP ratio below 60% by 2025.

Diokno earlier said the government will no longer borrow as much as what was done during the Duterte administration.

As of end-June, the last month in office of the Duterte administration, the national government’s debt stock amounted to P12.79 trillion. 

Digitalization

Meanwhile, Diokno said digitalization will be the best solution to eradicate corruption in the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

"I think digitalization will really be the key here and I think, to be fair to both agencies, they have done a lot already during the past administration and in fact what we can promise is we'll do even better," Diokno said.

He said this after Senator Sherwin Gatchalian, chair of the Senate ways and means panel, asked about the reforms that the BIR and the BOC will implement to reduce the graft issues that the two revenue collection agencies are facing.

"Let's call a spade a spade. Alam naman natin to this is an open secret and in the past many years when you talk about issues of corruption, controversy, taxpayer welfare and taxpayer grievances, Customs and BIR will always be on the top of the list and now that we are turning a new leaf under the current administration, every new administration is a new opportunity to redeem and also to institute reforms," he said.

For her part, BIR Commissioner Lilia Guillermo said the reason why she accepted the post is to "change the image" of the bureau through digitalization.

"I'm not only thinking about digital transformation but also moral transformation of the people by giving them more ways of making themselves more professionals," she said.

Part of the reform programs are training and webinars and rotation of personnel within the BIR.

Under the law, Guillermo said they can rotate people if they are staying in their jurisdictions for more than three years.

But Guillermo said they also need the taxpayers to cooperate with the BIR in terms of adapting to digitalization.

"If we do give online services to them, of course, they will also have to prepare their organizations to do submit to us soft copies, submit to us the systems that they will have like the electronic receipts and electronic invoices," she said.

"There are still taxpayers who wouldn't. They say they are not ready and things like that, therefore we want also the taxpaying public to be digitalized, not only BIR, it's really an integration or interface with them," she added.

"I know that six years will not be enough but the start will be there. We will start."

Deputy Commissioner Edward James Dy Buco also said the BOC is taking the path to digitalization to eradicate corruption in the agency.

"As mentioned by our dear secretary that digitization is really the solution. As I have reported before, 91% of our processes are already automated. So that's one of the solutions," he said.

"Actually, Mr. Chair, it's the dream or the mission of every commissioner to eradicate corruption and improve the image of the Bureau of Customs. So we are one  of the first agencies to implement our paperless transactions wherein our stakeholders transact with us online so there are no more physical or face to face transactions in the BOC as of now unlike before," he said.

Apart from this, Dy Buco said they have already introduced an integrity enhancement and moral transformation program and they already filed administrative cases against personnel who were involved in the alleged corruption activities in the bureau.

Asked by Gatchalian if the BIR and the BOC can achieve a zero contact transaction in the collection agencies, Dy Buco and Guillermo  said this is possible.

"As of now, we are in that direction of becoming a totally contactless customs administration...So presently, the filing of entries or the processing of the releases of goods are automated already," he told the Senate panel.

"But...despite the full automation may mga gaps pa rin na nakikita kami kasi meron pa ring mga tawagan sa telepono...but very possible po yung scenario na it will be totally contactless," he added.

On the other hand, Guillermo said this will be possible in the long run but they have to develop the systems that will handle it.

For the large taxpayers, Guillermo said they can easily implement fully automated transactions but the challenge is with the medium and small taxpayers.

"For the medium and small, we still have to do it because a no contact [transaction] means that the other end is also digitized. That is the challenge we have. Not all [taxpayers are] digitized. Therefore, we really have to brief them, talk to them, integrate our systems with them," she said. — RSJ, GMA News