Fiscal discipline enabled the government to stave off P2.2-trillion worth of public debt amid the pandemic, Finance chief economist Gil Beltran said Monday.
Beltran said the national government’s debt would have reached P15.4 trillion in 2022, higher by P2.2 trillion than the actual P12.76 trillion in April, because of revenue-eroding legislative proposals or those requiring new appropriations if the Duterte administration had not exercised fiscal discipline in responding to the pandemic.
“As we have said over the past few years, the government has consistently exercised fiscal prudence in responding to the COVID-19 pandemic. We spent what we had to, but not more than what we could afford. In fact, had we acquiesced to pressure for us to spend more, our debt would have increased by P2.2 trillion more and reached P 15.4 trillion,” Beltran said in a statement.
He said the government’s pandemic response strategically targeted the most vulnerable sectors.
Beltran said financing for the two Bayanihan Laws focused on ensuring that the most essential health interventions and emergency economic relief measures were funded fully.
He was referring to Republic Act 11469 or the Bayanihan to Heal as One Act and RA 11494 or the Bayanihan to Recover as One Act.
“Aware of the effects of additional spending on our borrowings, the DOF worked closely with legislators to limit the interventions under Bayanihan II to P140 billion, despite the objections of many other stakeholders,” Beltran said.
“The government did not support several stimulus bills, each proposing hundreds of billions of additional appropriations, precisely because we understood that this would translate into further increases in the deficit and debt,” he said.
Beltran said to deal with the effects of the pandemic in a strategic and cost-efficient manner, the government secured additional financing from multilateral partner-institutions to procure an adequate supply of vaccines for the target population.
He said the accelerated vaccination program, along with shifting to the alert level system with granular lockdowns and increased public transport capacity, paved the way to aggressively reopen the economy and restore jobs.
Other fiscally sustainable economic recovery programs were also enacted, including the Financial Institutions Strategic Transfer Act, which helps banks extend credit to more sectors by allowing them to offload non-performing assets and non-performing loans to FIST corporations; and the Corporate Recovery and Tax Incentives for Enterprises Act, which balanced a reduction in the corporate income tax rate with the rationalization of fiscal incentives.
Areport by the DOF-Domestic Finance Group showed that the passage of the proposed COVID-19 stimulus bills and other revenue-eroding measures would have led to additional spending or revenue losses of at least P2.2 trillion.
This would have increased the country’s overall debt level to P15.4 trillion.
Latest data from the Bureau of the Treasury showed the country’s total outstanding debt as of end-April 2022 reached a record P12.76 trillion as of end-March 2022 on government borrowings and weaker peso.