Over the next 10 years, the Department of Finance (DOF) has announced that the next administration will need to raise an additional P249 billion in revenue to pay off the country’s P3.2 trillion additional debt caused by the COVID-19 pandemic.
“Pursuing the fiscal consolidation and resource mobilization program as proposed will help us continue to spend on socioeconomic programs, maintain our credit ratings, and grow out of our debt,” Finance Secretary Carlos Dominguez III said in an emailed statement.
“Taking action now is our responsibility to future generations,” he added.
According to the DOF, they have prepared a fiscal consolidation plan to raise about P284 billion in additional revenue each year. However, its details have not yet been released.
By the end of March, the total debt of the Philippines had reached a record-high P12.68 trillion. This is due to the borrowing to fund the needs against the COVID-19 pandemic.
According to the officer-in-charge, Undersecretary Valery Joy Brion, the incoming administration has three options to pay off the debt — increase borrowing, reduce spending, or raise revenues.
The DOF announced that the first two options are not viable as they will raise the debt-to-GDP level to 63.5% and affect the country’s economic recovery.
Marcos admin needs additional P249B per year to pay off debt-DOF
Brion said the next administration can do the best thing is “to raise more revenues and improve tax administration, and for the government to channel resources from unnecessary and non-priority expenses to productive spending.”
According to Dominguez, fiscal consolidation and resource mobilization are needed to sustain long-term investments in education, health, infrastructure, and job creation.
Meanwhile, President-elect Ferdinand “Bongbong” Marcos Jr. declared on Thursday that Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas will lead the Department of Finance under his administration.
Diokno became the BSP governor in March 2019, succeeding the late Governor Nestor Espenilla Jr.
Diokno served as secretary of the Department of Budget and Management under President Rodrigo Duterte’s administration before joining the BSP.
During the Aquino administration, Diokno helped design several significant reforms, such as the 1986 Tax Reform Program, which simplified income tax and introduced the value-added tax (VAT), and the 1991 Local Government Code of the Philippines.
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