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P11-trillion debt can be paid—Palace

Malacañang said Tuesday the government has the capacity to pay its P11.07-trillion debt, saying the Department of Finance has put in place some measures to address the matter.

“The Philippines has the capacity to pay its debts even as it ramped up its borrowings to finance measures to address the prevailing coronavirus health crisis,” presidential spokesman Harry Roque said.

“Our reported external debt now is mid-range compared to economies that are the same as ours, like in Latin America and other lower-middle-income countries,” he added.

Data from the Bureau of the Treasury showed the Philippines’ debt hitting a new high at P11.07 trillion end-May compared to P10.99 trillion in April.

“So it looks huge, but we are in the mid-range and it won’t be a problem in terms of our ability to pay them off as they fall due,” Roque said.

"Our economic team headed by [Finance] Secretary Carlos Dominguez is very conservative. Several measures have already been put in place to address the problem,” he added.

He cited the Department of Finance’s report that the country’s debt remains bearable due to low-interest rates and a strong peso.

Roque said the government plans to borrow a total of P3.02 trillion this year to speed up the recovery of the economy.

Meanwhile, Albay Rep. Joel Salceda said the slowdown in inflation to 4.1 percent in June 2021 was a positive development for the economic recovery even as there are still key issues that need to be addressed.

"First, the 4.1 percent inflation rate is still very slightly above the 2-4 percent target band of the Bangko Sentral ng Pilipinas. Elevated inflation during a difficult time narrows our options when it comes to interest rate adjustments. We cannot afford any sudden contractionary interest rate increases at the moment, as it would constrict growth prospects during this period of recovery. We must remain vigilant with inflationary pressures."

"Second, inflation for key food items is still high, especially for meat. Meat inflation has decelerated to 17.2 percent from 22.3 percent. This is still above what many poor families can afford. Fortunately, the African swine fever (ASF) is beginning to retreat here and in our sources of meat imports. Nonetheless, the Department of Agriculture must sustain its efforts to prevent any further spread of the disease among farms and backyard hog raising facilities."

"Third, transport inflation, while declining, is still at elevated levels. Furthermore, the sudden suspension of free bus rides in Metro Manila is certain to make its dent on the July transport inflation. As a supply augmenting move, as well as a matter of basic moral duty, the P4.6 billion in unpaid obligations incurred by the government in contracting transport service providers under Bayanihan 2 should be paid as soon as possible," Salceda said.

Topics: Department of Finance , debt , Carlos Dominguez , Bureau of the Treasury
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