The administrator Marcos INCOMINGthe administration will not reduce government spending to meet budget inflation ofIfcit, said Benjamin E. Diokno, designated Chief Financial Officer and Governor of Bangko Sentral ng Pilipinas (BSP).
“There should be no cuts to our spending plan. I think we should really strive to raise enough taxes. I am confident that because of the tax system the Duterte administration will leave…we will be able to raise enough taxes to ensure that we meet our deficit targets,” he told ABS-CBN on Monday. NewsChannel.
Mr. Diokno, who was chosen by President-elect Ferdinand R. Marcos, Jr. to lead the Finance Department, said they would stick to the plan to reduce the government’s budget deficit to 3% of proceeds. gross domestic (GDP) by 2028. .
For this year, the budget deficit ceiling is set at 1,650 billion pula, which is equivalent to 7.7% of GDP. Economic managers set the budget gap ceiling at 6% of GDP for 2023, 5.1% for 2024 and 4.1% for 2025.
Asked if he would support proposals to impose new taxes, Diokno said recent tax reforms would give the next administration enough headroom to generate enough revenue.
The Treasury Office has previously estimated that the government needs to raise 249 billion pesos each year in additional revenue to avoid new borrowing to pay off the additional 3.2 trillion peso debt incurred during the coronavirus disease 2019 pandemic ( COVID-19).
Finance Secretary Carlos G. Dominiguez III has proposed a fiscal consolidation plan that involves imposing new tax measures, repealing some tax exemptions and postponing personal income tax cuts.
Dominguez said the government cannot cover existing debt by borrowing more or cutting spending every year.
Outstanding national government debt stood at a record high of 12.76 trillion pesos at the end of April.
Meanwhile, Department of Finance (DoF) chief economist Gil S. Beltran said the country’s debt stock would have ballooned to more than 15 trillion pesos this year had it not been for the government exercising Ifscalar caution.
“We spent what we had to, but no more than we could afford. In fact, if we had agreed to push for more spending, our debt would have increased by 2.2 trillion pesos and would have reached 15.4 trillion pesos,” Beltran said in a statement.
During the pandemic, Congress passed Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act and RA 11494 or the Bayanihan to Recover as One Act.
“Aware of the effects of additional spending on our borrowing, the DoF worked closely with lawmakers to limit Bayanihan II interventions to 140 billion pesos, despite objections from many other stakeholders,” Mr. Beltran.
The DoF cited a report by its Domestic Finance Group (DFG) showing that COVID-19 stimulus bills and other revenue-eroding measures would have resulted in additional spending amounting to at least $2.2 trillion. pesos if passed by Congress.
Economists, however, said the government should have increased spending to boost the Philippines’ recovery from the pandemic.
“I personally thought the government should have come out and done a bit more,” said UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion. “But, kudos to the government for doing the right thing given the lack of resources.”
ING Bank NV Manila’s chief economist, Nicholas Antonio T. Mapa, said in an email that increased spending during the pandemic could have helped revive economic activity.
“Additional stimulus at the height of COVID may indeed have inflated the country’s overall debt level…However, such a rollout may have revived economic activity, ensured a more effective and more effective response. quick to the crisis that could have finally [saved] the economy from falling into a deep recession,” he said.
“Improving the health of the country could in turn have generated revenue streams that could have compensated forIfcits and levels of indebtedness.
Mr. Mapa stressed the importance of measuring debt not only at its aggregate level, but also against the gross domestic product (GDP) of the economy.
“Substantial spending at the start of the pandemic may have pushed debt levels to high levels, but it could also have helped revive the economy earlier, restore income flows and reduceIfcities and a more dynamic economy that would eventually translate into lower debt-to-GDP ratios.
The Philippine economy contracted by 9.6% in 2020, but rebounded with growth of 5.7% in 2021.
Economic managers are targeting GDP growth of 7-8% this year. — Keisha B. Ta-asan and Tobias Jared Tomas