Debt ‘manageable’ at 64% of GDP
While the national debt, mostly obtained to finance projects meant to contain the effects of the pandemic, ballooned to P13.517 trillion as of September, it remained manageable, Finance Secretary Benjamin Diokno told lawmakers yesterday.
During a Commission on Appointments hearing that confirmed his appointment, Diokno added the debt level should “not be a cause for concern.”
According to data released by the Bureau of the Treasury earlier this month, the debt-to-gross domestic product ratio increased to 63.7 percent in the third quarter from 62.1 percent in the second quarter.
Diokno stated that the debt-to-GDP ratio remains “very manageable” compared to that of other nations “whose debt-to-GDP ratio is 200 percent or 100 percent.”
He also mentioned that the debt-to-GDP ratio was “very low” at less than 40 percent before the pandemic.
However, the Finance chief attributed the higher debt-to-GDP ratio to the government’s efforts to strengthen its response to the Covid-19 plague, including purchasing vaccines and improving the country’s healthcare system.
“Although we came from a very low debt-to-GDP ratio of less than 40 percent before the pandemic, it went up to around 62 percent because of the pandemic because we have to buy the vaccines, we have to beef our health services, etcetera,” Diokno explained.
Recession not expected
During the same Commission on Appointments hearing, Camarines Sur 2nd District Representative Luis Raymund Villafuerte asked Diokno about the government’s plan to mitigate the impact of a looming global recession.
“Given the data that we have under very extreme conditions, we will not have a recession because we have a very young population,” Diokno said.
The Philippines is in a demographic sweetspot where majority of the population is in the working age which means that the country will not have a labor shortfall unlike its neighbors with an aging population.
Because of the developments in the local economy, the Finance chief said the country wouldn’t be affected by the global economic downturn.
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