DOF targets 52% debt ratio by 2027 – Manila Bulletin
The Ministry of Finance has said that bringing the government’s debt ratio back to the pre-pandemic level of 39% is not crucial for the new administration, saying it will have to wait until 2027 to reach 52.5% by compared to the current level of more than 60%, which is lower. international standards.
Finance Secretary Benjamin E. Diokno said the Marcos administration was not aiming to bring the government’s pre-pandemic debt-to-gross domestic product (GDP) ratio down from around 39%, stressing that priorities should be economic growth and the needs of the population.
When asked if the Marcos administration plans to bring back the 39.6% debt ratio seen before the pandemic hit in 2022, Diokno replied “given where we come from, I think this It will be a mistake for us to aim for this level”.
“I think we need to prioritize growth first, to meet the needs of our employees rather than going back to that number. It’s not crucial to go back to 39, we need to prioritize our growth and needs of Filipinos,” said Diokno.
Diokno said the goal was simply to bring the debt ratio below the international threshold of 60%.
“Right now, the national debt-to-GDP ratio, as we expect, is around 61.8%. It will fall back to 61.3% by 2023, then drop back to 60.6% by 2024, then to 59.3% by 2025, 57.7% by 2026 and 2027 to 52.5% said Diokno.
“In other words, by the end of the Marcos years, we expect the national debt-to-GDP ratio to be below 60%,” he added.
According to Diokno, a debt level above 50% is not harmful, citing the current global debt-to-GDP ratio of between 200% and 300%.
“This type of debt structure is nothing to worry about. It is one of the lowest even among emerging economies,” Diokno said. “The sky is not falling because our GDP ratio is 62 %.
At the end of May 2022, outstanding national government debt stood at 12.495 billion pesos.
“The way out of this is to grow at a faster rate, we’ve just exceeded our debt, most of our debt, incidentally, our medium to long term,” Diokno said.
Since 2019, total national government debt has fallen by just 7,731 billion pesos, or 39.6% of GDP.
Last April, former finance secretary G. Dominguez III said the new administration should avoid racking up additional debt and prioritize policies that will spur more economic activity.
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