Recent Posts

Breaking News

Economic recovery can’t run at full speed — DOF

The country’s economic recovery cannot not run at full speed, but the government has fiscal stamina to complete a long-distance race, the Department of Finance (DOF) said yesterday.

Finance Secretary Carlos G. Dominguez III said the government can sustain a long-drawn out battle against coronavirus, noting its recent reforms have helped the country bring down its debt ratio to a historic low of 39.6 percent in 2019.

The low debt-to-gross domestic product (GDP) ratio is the government’s “stamina” to ride out this unprecedented crisis, he pointed out.

“When the pandemic struck, we were able to quickly access emergency loans from our development partners and the commercial markets at very low rates and longer repayment periods,” Dominguez said.

“These loans have provided us a good amount of ammunition to fight the pandemic,” he added.

But the finance chief admitted that economic recovery is not going to be quick.

For this reason, he explained the government must conserve its “fiscal stamina.”

“While we know that economic recovery is not going to be a sprint, we do have the fiscal stamina for running this marathon,” Dominguez said.

He explained it will be an “advantage” if the government can keep its budget deficit within manageable limits “so we can continue to access financing at terms that are favorable to the Filipino people.”

Earlier, Dominguez said the DOF would not bow-down to pressure to increase the national government’s economic stimulus to cushion the impact of the pandemic-induced crisis.

He said the government will keep its economic stimulus plan at P180 billion to maintain a manageable budget deficit ratio.

Dominguez said the government is ready to spend P140 billion for an economic stimulus plan this year, and free another P40 billion in tax credits to the private sector in the form of an immediate reduction of the corporate income tax rate from 30 percent to 25 percent.

 “This number was arrived at to keep our fiscal deficit in a manageable zone,” Dominguez said.  

The government expects a higher deficit-to-GDP ratio for 2020 that it aims to keep below or at the median of the levels of its peers in the Association of Southeast Asian Nations (ASEAN) region.

For this year, Dominguez projects a ceiling on the deficit-to-GDP ratio at 9.6 percent, which will lower to 8.5 percent in 2021 and 7.2 percent in 2022.


Source: Manila Bulletin (https://mb.com.ph/2020/08/30/economic-recovery-cant-run-at-full-speed-dof/?utm_source=rss&utm_medium=rss&utm_campaign=economic-recovery-cant-run-at-full-speed-dof)

No comments