The Manila Times

DIOKNO PLAYS DOWN RISING DEBT CONCERNS

MAYVELIN U. CARABALLO

BENJAMIN Diokno, the chosen Finance secretary of President-elect Ferdinand “Bongbong” Marcos Jr., has played down concerns over the Philippines’ increasing debt, saying the country is still well-positioned to meet its obligations.

In an interview on ANC on Friday, Diokno, the former chief of the Bangko Sentral ng Pilipinas, said that in his more than 30 years in the government, he has seen the Philippines’ worst crises, and believes the country can better manage its debt this time.

“I’ve seen a debt to GDP (gross domestic product) ratio close to 100. So, I’ve seen the worst of the Philippines. At that time, we’re heavily indebted.

And we had a hard time arguing with the IMF (Internation- al Monetary Fund) on our program. Now we don’t have an IMF program. We are a net contributor to IMF,” he said.

In 2012, the Philippines officially became an IMF creditor, lending financial aid to other member countries.

Diokno also said the country’s foreign exchange reserves, which previously only covered a few weeks’ worth of imports, now cover more than nine months’ worth of imports.

At the end of April this year, the country’s gross international reserves stood at $106.75 billion.

Given these factors, Diokno believes the Philippines is in a stronger position right now, particularly because the Duterte administration will leave its successor with a far better tax framework.

“So, I’m not worried about the level of the debt, for example. That’s 63 percent. That’s easily manageable as long as the economy can grow at 6 to 7 percent, which was our record before the crisis,” he emphasized. “We can easily outgrow our debt and most of our debt [is] domestic rather than foreign,” Diokno said.

At the end of March, the government’s outstanding debt rose by about P600 billion, reaching a new high of P12.68 trillion, or 63.5 percent of GDP. The majority of the borrowings (69.9 percent) were domestic, with the balance coming from abroad.

Diokno said the immediate problem is cutting the budget deficit from 6.4 percent of GDP in the first quarter of the year to just 3 percent.

He said it already is a strategy, but declined to comment on planned tax measures under the present Department of Finance leadership’s fiscal consolidation plan.

“Taking a bird’s-eye view of our situation, our problem really is to get back on our growth trajectory because that will solve a lot of problems. If we grow at 6 to 7 percent, that solves our tax revenue problem, that will solve our deficit problem, that will solve our debt problem,” Diokno said.

With continued economic growth and the new administration’s poverty-reduction plan, he is confident the poverty level, which was 18 percent last year, can be reduced to a single digit by the end of its term.

“Everything goes to growth. And so our focus should be how do we make all sectors grow because there are some laggards like agriculture, which was not growing all these years. … So, we have to make sure that all sectors of the economy will grow,” Diokno said.

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2022-05-28T07:00:00.0000000Z

2022-05-28T07:00:00.0000000Z

https://digitaledition.manilatimes.net/article/281552294482953

The Manila Times