Bigger population good for debt payment? Here’s what Diokno has to say

Finance Secretary Benjamin Diokno took lightly the suggestion of Senator Ronald “Bato” dela Rosa that Filipinos should bear more children to lower the country’s debt per capita.

During his weekly press chat, Diokno was asked to comment on Dela Rosa’s remarks during the Senate Committee on Finance briefing on the 2024 National Expenditure Program with the Development Budget Coordination Committee (DBCC).

In response, the Finance chief said, “Nagbibiro lang ‘yun (He was just joking).”

As to having more children, the chief economic manager of the Marcos administration said, “Kung kaya mong buhayin, pag-aralin, why not ‘di ba (If you can raise them, send them to school, why not)?”

“But you have to assess your resources,” Diokno said.

Dela Rosa raised the idea that a higher population would make the debt more manageable.

“Mayroong nagsasabi na mas maganda siguro kung mas manganak tayo ng maraming anak kasi para lumaki ang population natin at pag lumaki ang population, mas marami ang mahahati-hati sa utang, mas bababa ang per capita na utang natin,” the senator said.

(Some say we should have more children so our population will increase and the debt will be divided among more people. Our debt per capita would go down.)

As of end-June 2023, the country’s sovereign debt amounted to a fresh record high of P14.15 trillion. 

To recall, in 2022, Dioko described as “non sequitur” the economic think tank IBON Foundation’s analysis that if the then debt pile of P12.5-trillion would be divided among the country's 110 million population, each Filipino owes over P112,000, which will be paid in the form taxes.

Diokno had said that while some pay more taxes than others or "in general the rich pay more taxes than the poor," both income classes are entitled to the same benefits from the government.

Reiterating the same perspective, he said, “Actually, the right way of looking at the government budget is who benefits from it and how it is financed.”

“So if you're poor, do you pay taxes? Yes, but not income tax, but you get a lot of benefits, right? It’s called net incidence,” he said.

Meanwhile, during the Senate hearing, Diokno maintained that the current debt situation of the country is not worrisome and is still manageable, describing the 60% debt as percentage of the country’s gross domestic product as “reasonable.”

As of the first half of 2023, the Philippines’ debt-to-GDP ratio stands at 61%, lower than the 62.1% during the same period last year.

For the entire year, Diokno said the government is targeting a debt-to-GDP ratio of 61.4%.

The debt-to-GDP ratio represents the amount of the government’s debt stock relative to the size of the economy.

“Our target [is] to bring down the debt-to-GDP ratio to less than 60% by 2025,” Diokno said.

By the end of the Marcos administration’s term in 2028, the government aims a lower debt-to-GDP ratio at 51.1%. —KBK, GMA Integrated News