Build, build, build for debt, debt, debt
Talking about spending a lot of money now so that we may have a possibility of earning it all back in the future.
DOF says keep spending on new infrastructures to the next President
The Department of Finance (DOF) believes that infrastructure development must be continued as a priority for the next President of the Philippines despite other financial issues caused by the prolonged COVID-19 pandemic.
Former undersecretary Gil Beltran mentioned last Saturday in an economic bulletin that the country has to bring down the debt-to-gross domestic product (GDP) ratio through fiscal consolidation. This is the Philippine economy’s chance to recover from the large losses it has incurred in the last two years.
The economic team of President Duterte will turn over a fiscal consolidation plan to the next administration with suggested solutions such as “higher taxes, spending cuts on non-priority sectors, and economic growth drivers to revert the budget deficit to pre-pandemic levels of about 3% of GDP while repaying debts.”
Beltran pushes to continue developing infrastructures. While he is aware that putting a hold on infrastructure investments will narrow down deficits for the meantime, he mentions that in the long-run, economic recovery will benefit from the initial spending.
Completed infrastructure projects attract investor interest and confidence as it increases the country’s productivity rate and growth potential. Beltran points to the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) in support of his statements. The act allows businesses who were affected by the pandemic to receive lower tax rates, which also aims to lure in big investments when paired with attractive fiscal perks.
The National Economic and Development Authority (NEDA) Board is also in support of this initiative rather than wasting money on “non-essential projects”. They primarily blame the COVID-19 pandemic for “significantly reducing the national government’s fiscal space” which resulted in the massive bump up of the annual debt-to-GDP ratio to a 16-year high of 60.5% and the full-year budget deficit to a record 8.6% of GDP in 2021.
The Presidential candidates have another solution
In the most recent Presidential debate hosted by the Commission on Elections last Saturday, March 19, 2022, the candidates discussed their plans for economic recovery as it is one of the most pressing issues the country is facing today.
While each of them have different answers, Vice President Leni Robredo and Manila Mayor Isko Moreno agree that collecting the $3.8 billion owed by the Marcos family will significantly help speed up economic recovery and aid the less fortunate members of the country.
Taking advantage of the absence of Bongbong Marcos Jr. in the debate, the other presidential bets agree on charging the late dictator’s son on the large debt his family has acquired and accumulated over the years.
