The government will settle its debt to the BSP before the new administration, according to Dominguez.
Finance Secretary Carlos Dominguez III said that the government will settle its debt to the Bangko Sentral ng Pilipinas (BSP) before the new administration.
The country’s finance chief said in an online forum with the Tuesday Club that the Duterte administration plans to clear its debt with the central bank before the end of its term.
According to Dominguez, they have taken the initial step in the consolidation plan it will pass on to the next administration by clearing the government of any BSP debt by June.
The government paid the PHP 540 billion in provisional advances it borrowed from the central bank last December to cut its outstanding debts owed to foreign and domestic creditors. The payment was made 1 month ahead of the extended deadline in January.
Further, the government decided to trim its provisional advances from the central bank to PHP 300 billion.
Under the New Central Bank Act (Republic Act 7653), the central bank may give provisional advances to the government, with or without interest, in order to finance expenditures listed in the yearly program.
However, the Department of Finance looks to bring down the borrowing volume moving forward as the DOF expects revenue collections to pick up the pace and to shoulder the bulk of state spending.
According to Dominguez, he would leave it to the next administration to decide whether new taxes like the proposed tax on carbon waste should be slapped. He likewise said that the next administration should concern itself with how it can fund pandemic programs without bloating the debt pile any further.
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Based on a report on Philstar, the next administration will find itself in a tight spot organizing its finances for its 6-year term as the national debt has risen to a level that the international community may find alarming.
The debt stock grew by nearly 20% to PHP 11.73 trillion in 2021 from PHP 9.8 trillion in 2020. When measured against the gross domestic product (GDP), the Bureau of the Treasury said that the national debt ballooned to 60.5%, from 54.4% in 2021.
As such, the debt-to-GDP ratio has surpassed the government’s target of 59.1% and the European standard of 60%, which credit monitors and multilateral lenders use as a metric in order to assess an economy’s capacity to repay debts.
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