FINANCE Secretary Carlos G. Dominguez III on Tuesday said the government is keen on capping its budget deficit at 9% of gross domestic product (GDP) this year, warning against “spending too much above our means.”
“While the government is borrowing more than usual this year in order to fund healthcare, social protection and other essential programs while our revenues are down, we have to be careful about spending too much above our means,” Mr. Dominguez said in a statement.
State borrowings reached P1.22 trillion in January to April, based on data from the Treasury, with P982 billion coming from domestic lenders and P237 billion from external sources.
The government borrowed P1.06 trillion in 2019.
The Department of Finance (DoF) chief said the government is “careful not to borrow beyond sustainable levels, lest we fall into a vicious cycle of accumulating unmanageable debt, which might drastically increase our financing costs, and plunge us deeper into debt.”
“Loans are not free money. They are advances that we, or even our children and their children, will have to pay for in some way in the future… Hence, it is an imperative that we limit state spending to a manageable and sustainable level equivalent to a 9% budget deficit,” Mr. Dominguez added.
The Development Budget Coordination Committee (DBCC) in May projected the budget deficit to widen to 8.4% of GDP this year.
Mr. Dominguez said “fiscal space should be saved” in case the pandemic worsens and forces the government to spend more on healthcare, subsidies and stimulus measures.
On Tuesday, the Health department reported 1,540 new coronavirus infections, bringing the total to 47,873.
The economic team is pushing for a P180-billion recovery plan, which includes P140 billion in new spending under Bayanihan II bill and the proposal to cut corporate income tax to 25% this year.
Meanwhile, the government’s Economic Development and Infrastructure Cabinet clusters will hold a forum on Wednesday to discuss the country’s recovery plan ahead of President Rodrigo R. Duterte’s fifth State of the Nation Address on July 27.
“The audience can expect Secretary Dominguez to delve deeper into the challenges we’re facing right now, the accomplishments in the previous year that we can build on, and the legislative proposals that the economic team submitted for Congress to consider,” Finance Assistant Secretary Antonio G. Lambino II said in a statement. — B.M.Laforga